[MORNING CALL:] Going For the Gold

As we enter the waning days of July, ex-SSA issuance for the month stands at $103.204bln, only the third time in history that July issuance has topped the century mark. It also makes this month the busiest issuance July since $120.33bln priced back in July of 2017.

To close out the month, on average, the respondents to our weekly issuance poll are looking for $27bln to price in the high grade primary market this week, with a range of guesses from a low of $20bln, to a high of $35bln. If we were to see issuance just reach the lowest estimate, it would make this July, the second most prolific ex-SSA issuance July on record. Although, if the average estimate were to come to fruition, July 2024 would take over the top spot from July of 2017 when $128.48bln was priced.

But those estimates were for the entire week, of which only three days would count for this month. However, whatever issuance we do see this week, or at least the bulk of it, is expected to be crammed into the first half of the week, since the markets will be fixated on, not only a bevy of earnings from some of the most influential companies in the business – Microsoft, Apple, Meta and Amazon – but a trio of central bank rate decisions as well.

The Fed, whose two-day policy meeting concludes on Wednesday, while not expected to cut rates this time around – traders in the Fed Funds futures market are giving only a 4.1% chance of a cut this week – the markets will be looking for any change in the central bank’s stance given the recent spate of weak economic data.

On the other hand, there is a good possibility that the Bank of Japan will raise rates when it convenes on Wednesday and the Bank of England is widely expected to cut rates when it meets on Thursday, though the ECB says it needs to see more proof of slowing inflation before it resumes cutting rates.

There are already four deals slated to price today. Marcedes-Benz Finance North America is in the market with a 5-pt offering of 2s, 3s, 5s and 7s. Banco Santander is marketing a perpnc10 preferred offering, while Honeywell is in the market with a 4-pt offering of 3s, 5s, 7s and a tap of its existing 5.35% due 2035 and L3Harris Technologies is looking to sell 30yr notes. From what we’re told they are expected to be joined by at least four more borrowers.

As for market conditions this morning, after a very volatile week in the broader markets last week, futures are indicating a higher open for the three major averages, while Treasuries rallied over the weekend on the back of the most recent economic data, which showed a slowing economy and a cooling off of the labor market, the two factors that could prompt the Fed to cut interest rates in the near future - traders in the Fed Funds futures market are putting the odds of a cut in September at 89.6%, with a 10% chance of a 50bp cut.

The benchmark 10yr note, which closed out last week at 4.20%, traded 5bp over the weekend to 4.15%, while the long bond yield is lower by 4bp, at 4.41%, though the 2yr note yield is unchanged at 4.36%. Corporate spreads were also unchanged from last week, with the average high grade bond now trading 95bp over comparable Treasuries.

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2024 HIGH GRADE ISSUANCE - 2024 VS 2023 COMPARISON

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2024 HIGH GRADE ISSUANCE - 07/29 WEEK, JULY & 2024 ESTIMATES

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2024 HIGH GRADE ISSUANCE - RECENT MANDATES

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2024 HIGH GRADE ISSUANCE - 7/29 CALENDAR

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