[MORNING CALL:] Guess What Day It Is?

Remember that GEICO commercial from a few years back? “Uh-oh! Guess what day it is? Guess what day it is! Huh…anybody? Julie! Hey…guess what day it is? Ah come on, I know you can hear me. Mike! Mike! Mike! Mike! Mike… What day is it, Mike? Ha ha ha ha ha ha! Leslie, guess what today is?” It’s “Fed Day.” Whoot Whoot! And that will probably be the only thing to “Whoot Whoot” about since, from the looks of it – there were no deals announced overnight - there won’t be any corporate issuance today, to add to the $22.3bln in ex-SSA issuance already on the books this week, leaving us short of the average weekly estimate of $27bln.

Still going into the last trading day of the month, which also happens to be “Fed Day,” ex-SSA issuance for the month stands at $125.504bln, earning it a “silver medal” when it comes to July issuance, topping July 2017’s $120.33bln, but finishing behind July 2015’s $128.48bln. Still, it blew away all monthly estimates including the highest one of $95bln and topped the 10yr average ($88.5bln) by leaps and bounds. With the addition of $23.8bln in SSA issuance, overall (SSA-inclusive) issuance ($149.304bln) also earned a “silver medal”, finishing behind July 2015’s record $162.85bln, and topping the decade-long July average of $110.298bln.

Like so many Olympic athletes who have survived the grueling preliminary heats and semifinal matches just to make it to the finish line, high grade issuers may just be as spent after a whirlwind July. With the addition of, what is expected to be the last of the activity in the July primary market, six issuers, who apparently had enough left in the tank, combined to raise $8.7bln yesterday in what could be the last hurrah for the month. (For a recap of yesterday’s deals see last night’s “The Endgame”)

As for market conditions this morning as investors await, not so much the Fed’s decision on interest rates, since they’re expected to leave rates unchanged (96.9%), but Fed Chair Powell’s comments as to just what path the central bank will take regarding interest rates going forward, the equity market, the Nasdaq at least, looks to be attempting a rebound from yesterday’s drubbing.

Right now, it looks like the Dow (+50) and the S&P500 (+0.95%) will open marginally higher, while the Nasdaq (+1.58%) is in full rally mode, after encouraging earnings results from AMD (+9%), pulling Nvidia (+6%) along with it. This after the Nasdaq (-1.28%) reeled from declines in the share prices of some of the key tech names. Nvidia, Microsoft – down 7% in aftermarket trading despite reporting earnings that beat Street estimates, Apple, Alphabet and Meta and Amazon, who report later this week, all lost ground today dragging down the index, as investors have been concerned of late that there is a cooling off in AI spending, a phenomenon that has fueling this year’s rally.

But high-tech names were not the only thing dragging the indices down yesterday. Shares of Merck dropped 10% as weaker-than-expected guidance for the full year overshadowed better-than-expected Q2 results, while Proctor & Gamble fell 6% after its quarterly revenue fell short of the Street’s estimates due to disappointing demand in China.

However, those losses were more than offset by hefty gains in JetBlue (+20%), Sprouts (+15%) and Varonis Systems (+13%) all of whose earnings beat the Street, allowing the Dow to close 204 points higher, while the S&P500 and the Nasdaq closed 0.50% and 1.28% lower, respectively. Though they did close off their lows of the day.

Meanwhile, the Treasury market seemed to be content to tread water like a water polo team yesterday until the conclusion of the Fed’s two-day policy meeting for better insight as to just what path the central bank will take regarding interest rates. The benchmark 10yr note saw its yield fall 2bp to 4.15%, while the long bond did the same, closing at 4.40%. However, the 2yr note yield didn’t budge, closing unchanged at 4.36% for the third straight session. Coming into today’s session, Treasuries rallied overnight to where the benchmark 10yr note is now yielding 4.13%, while the long bond yield fell 2bp to 4.38%. Even the 2yr note got into the act with the yield falling 1bp overnight to 4.35%. However, corporate spreads widened 1bp to where the average high grade bond is now trading 96bp over comparable Treasuries – unchanged on the month.

Traders in the Fed Funds futures market have priced in a 100% chance for a 25bp rate cut in September, and a 12% chance of the cut being 50bp. However, there are some who believe a 25bp cut won’t have much of an impact on the overall market since the markets have gotten out ahead of the Fed, much as they usually do, and already priced in any potential rate cut, though a 50bp cut would cause the markets to stand up and take notice.

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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 - 7/30 PRICINGS

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