[THE ENDGAME] : That's A Wrap

In typical knee jerk fashion, the three major indices swooned after Q1 GDP declined at a 0.3% rate, a reversal from a 2.4% increase in Q4. The Dow collapsed nearly 800 points, while the S&P500 and the Nasdaq fell as much as 2.24% and 2.81%, respectively. However, from there it was a reversal to rival any we saw during the month with the Dow closing 142 points lower. The S&P500, despite a spate of mixed earnings results, and weaker than expected economic data, also rallied from its lows of the day to close +0.15%, while the Nasdaq (-0.09%) had a tougher time of it.

At the same time, the Treasury market took the latest read on the economy in stride with yields, for the most part, as close as you can get to unchanged on the day. The benchmark 10yr note went out at 4.18%, better by 1bp on the day, while the 2yr note, which closed at 3.65% inched 3bp lower to 3.62%. However, the long bond saw its yield edge 4bp higher, closing at 4.68%.

Due to the volatility in the market, it was a dismal month with the Dow falling 3.3% on the month, while the S&P500 ended the month down 0.8%, though the Nasdaq was able to turn in a positive (+0.8%) result.0.0%. It was a different picture in the Treasury market where yields fell. The benchmark 10yr note, which opened the month yielding 4.23%, traded as high as 4.48% and as low as 4.01%, before closing out the month yielding 4.17%. The long bond also went on a rollercoaster ride throughout the month (4.91%/4.41%) while closing 7bp higher on the month at 4.66%, while the 2yr note (3.96%/3.65%) closed 29bp lower on the month at 3.60%.

While the slew of economic data, not to mention uncertain investor sentiment was expected to keep most high-grade borrowers on the sidelines, three borrowers elected to forge ahead, adding $4.85bln to this week’s tally, which now stands at $28.375bln, just shy of the average weekly estimate of $32bln – don’t expect much help tomorrow with many countries’ markets closed for the observance of May Day. That also brought ex-SSA issuance for the month of April to $105.69bln, enough to top the average monthly estimate of $105bln – three out of four months - while $31.85bln in SSA issuance - $4.75bln was added today – brought overall (SSA-inclusive) issuance for the month to $137.54bln, also topping the average monthly estimate of $125bln, for the fourth straight month. Year-to-date, ex-SSA issuance ($650.296bln) is running at a 0.9% faster pace than last year ($644.644bln), while overall issuance ($844.023bln) is running virtually even (-0.3%) with last year ($846.434bln) at this time.

April saw all “big six” banks, with the exception of Citigroup, tap the US public debt market after reporting quarterly earnings, some more than once – Goldman Sachs. Combined, those five raised $32bln, or 30% of this month’s ex-SSA take. There were also five M&A-related offerings priced this month totaling $9.85bln. That brought the total number of M&A-related deals priced this year to 20, which have raised $81.5bln, or 12.5% of the year-to-date ex-SSA total volume of the year’s total volume. Last year there were 49 M&A-related deals priced, raising $178.59bln, or 11.7% of the year’s total volume.

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