[MORNING CALL:] More Yankees

I wouldn t say we have a full calendar of high grade deals on the docket today, but at least it won t be another ex-SSA zero issuance day. It was a little surprising that we didn t see at least one ex-SSA high grade bond deal come to market yesterday the tenth zero issuance day of the year with the window of opportunity being limited to, at the most, two days, with an early close on Wednesday, ahead of the Fourth of July holiday on Thursday, and the June jobs report (190k) due to be released on Friday, to a mostly absent audience.

But two issuers decided to take advantage of that seemingly last window of opportunity to forge ahead with offerings. ANZ Bank New Zealand is prepping a $500m (WNG) 10nc5 subordinated note offering, while Sumitomo Mitsui Financial Group is in the market with a 5-pt offering of 5yr fixed and/or floaters, 7yr and 10yr senior unsecured notes and a 20yr subordinated Tier 2 offering. At this time last year the company raised $4.3bln through a similar offering. To refresh your memory, of the 24 issues that came to market last week, 17 came from foreign entities, who raised $26bln of the week s $31.95bln (81.3%).

There was also one SSA offering launched overnight. European Investment Bank is looking to raise $4bln through a 7yr SEC registered global "climate awareness" "green" bond deal, that has built a book of $21bln to go along with yesterday s $3.5bln 2-pt deal from Bank Gospodarstwa Krajowego.

If you recall, the respondents to our weekly issuance poll, on average, were looking for no more than $6.5bln to cross the tape this week, with a range of guesses from a low of $5bln, to a very optimistic high of $15bln. While the highest estimate might be a bridge too far, the average estimate could definitely be breached since we ve been told to expect at least three more borrowers to sneak in before the market all but shuts down for the week.

As for market conditions this morning, futures are indicating a lower open across the board for the three major averages. This after the Dow traded all over the lot yesterday before closing 50 points higher, while the S&P500 (0.27%) just barely made it over the flat line, and the Nasdaq (0.83%) managed to surge higher on the day, closing at yet another all-time record high.

It was a different story in the Treasury market where yields continued to rise as traders turned their attention to the prospects of an increasing federal deficit regardless of the outcome of the presidential election in the fall. The benchmark 10yr yield jumped 11bp to close at 4.48%, its highest level in three weeks, while the long bond saw its yield rise 13bp to 4.64%, and the yield on the 2yr note, the most susceptible to the vagaries of underlying interest rates, moved 5bp higher to 4.76%.

The market seems to have calmed down a bit overnight with the benchmark 10yr yield falling 3bp to 4.45%, the long bond yield falling by 2bp to 4.62%, while the 2yr note yield inched 1bp lower to 4.75%. The mini rally was fueled by a report that showed Eurozone inflation slowed to 2.5% last month, and remarks from Chicago Fed President Austan Goolsbee who said the Fed should automatically cut interest rates if US inflation continues to fall back to target (2%). Corporate spreads, on the other hand, tightened 2bp overnight to where the average high grade bond is now trading 94bp over comparable Treasuries.

That had traders in the Fed Funds futures market upping the odds of as September rate cut to 59.9%, slightly higher than yesterday s 58.2%, even though over the past couple of weeks, more than one official has stressed the need for more data evidence of waning inflation and an easing of the economy before making a decision about when and how often, if at all, to cut interest rates this year.

The markets will be keeping one eye on the May JOLTS report (7950k) this morning for signs of a slowing of the labor market, and the other on Fed Chair Powell s remarks at the ECB Forum in Portugal.

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2024 HIGH GRADE ISSUANCE - 2024 VS 2023 COMPARISON

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2024 HIGH GRADE ISSUANCE - 07/01 WEEK, JULY & 2024 ESTIMATES

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2024 HIGH GRADE ISSUANCE - RECENT MANDATES

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2024 HIGH GRADE ISSUANCE - 07/02 CALENDAR

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2024 HIGH GRADE ISSUANCE - 07/01 PRICINGS

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