[MORNING CALL:] Yankee Doodle Dandy

It may be a week early for this morning s title, but it seemed appropriate considering the amount of Yankee issuance we have seen this week in the high grade primary market. The onslaught of Yankee issuance continued yesterday with four more foreign borrowers tapping the US public debt market for an additional $3.35bln. That brought the number of foreign issuers to come to market this week to 12 (out of the 19) issues priced. Amongst them, they have raised $17.9bln of this week s $23.85bln.

And the invasion continued overnight with the announcement of three more deals slated to price today. Mizuho Financial Group is in the market with a 2-pt offering of 6nc5 and 11nc10 fixed-to-fixed notes, while Nomura Holdings will be looking to sell 3yr fixed and/or floaters and 10yr notes. Joining them will be Japanese pharmaceutical giant Takeda Pharmaceutical who is marketing a 4-pt offering of long dated (10yr, 20yr, 30yr and 40yr) maturities.

Coming into today s session, this week s haul ($23.85bln) has already surpassed the average weekly estimate ($20bln) for the nineteenth (out of 26) week this year. And with today s lineup that s not to say we could see a couple more deals announced before the open the highest weekly estimate of $25bln is certain to fall by the wayside as well. Last night we pointed out that high grade issuance in June now stands at $94.575bln. While close enough for government work, the average monthly estimate was calling for $95bln to come to market, it s not close enough to keep the six-month streak of surpassing the monthly average estimate alive.

However, today s calendar should be more than enough to keep that streak alive. As a matter of fact, it s a sure bet that the highest estimate of $100bln will also be eclipsed, making this month the first June in three years ($116bln/2021) where ex-SSA issuance has surpassed the century mark.

As for overall (SSA-inclusive) issuance, coming into the month, the respondents to our monthly issuance poll were looking for, on average, $110bln in overall issuance to come to market. With the addition of $17bln in SSA offerings, overall issuance for the month stands at $111.575bln. That also brought overall issuance for the year to $1.117.109bln, 20.8% ahead of last year at this time. The average overall estimate for the year came in at $1.42trln. Year-to-date, ex-SSA issuance - $875.259bln is running 22.6% ahead of this time last year. But, we re not done just yet. Korea Gas is looking to sell 5yr notes to go along with the three Yankee offerings.

That s not to say that this week s deals didn t run into a bit of a headwind. Whereas Tuesday s six deals got a lukewarm reception from investors - 22.7bp contraction from IPT/PX, only 2.84x covered, pricing with an average NIC of 5.33p yesterday s deals go the cold shoulder contracting only 20.9bp from IPT/PX, being 3.22x covered, and pricing with an average NIC of 10bp, one of the highest average NIC we've seen all year.

Needless to say, the overall negative sentiment in the Treasury market might have had something to do with it. A hotter-than expected Australian CPI print, which increased the odds of a rate hike by 33%, and reverberating comments from various Fed officials, which suggested that they wish to see further evidence of cooling inflation before starting to cut borrowing costs, sent Treasury yields higher. The benchmark 10yr note yield jumped 9bp to close at 4.32%, its highest level in two weeks, while the long bond saw its yield also tack on 9bp, closing at 4.45%. The 2yr note yield moved 6bp higher closing at 4.71%, the stop of this week s $70bln 5yr auction. Corporate spreads also widened yesterday to where the average high grade bond is now trading 97bp over comparable Treasuries.

As for market conditions this morning, as the markets await several economic data points - durable goods orders (-0.5%), the all-important PCE index (3.6%), the Fed s favored inflation measure and weekly initial jobless claims (235k), futures are indicating marginal losses across the board for the three major indices. This after the Dow closed 16 points higher, while the S&P500 (+0.16%) was just as lucky. Despite another losing day for shares of Nvidia (-2.2%), the Nasdaq was able to eke out a fractional (+0.49%) gain.

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2024 HIGH GRADE ISSUANCE - 2024 VS 2023 COMPARISON

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