Fixed Income Update: Presidents’ Day Week

A short week ahead due to yesterday’s President’s Day Holiday.  Treasuries gained today as the Empire Manufacturing report released today was a 4.48.  The survey of manufacturing executives was bearish when compared to the expected number of 8.5 and its prior number of 12.51.  February’s home builder’s sentiment was also lower as the National Association of Home Builders Market Index reported a 46 compared to the surveyed number of 56.  The next three days will provide significant economic measures as the market continues to weight the degree of strength for the U.S. economy.  Tomorrow’s MBA Mortgage Applications (-2% prior), Housing Starts (950k expected) and Thursday’s CPI (0.3% expected), along with Initial Jobless Claims (335k expected), should provide some additional guidance.  In addition to economic releases, the Federal Reserve will release its January 28-29th meeting notes.

The S&P/BGCantor Current 10 Year U.S. Treasury Bond Index was down last week by -0.23% and is now down -0.43% for the month.  The Treasury issuance calendar is light for this week including Bill issuance and $9 billion of the 30-year TIPS on Thursday.

Year-to-date the S&P U.S. Issued Investment Grade Corporate Bond Index is still performing well with a 2.01% return.  Month-to-date the index has only returned 0.08%.  After a healthy January where investors moved investments up into investment grade from riskier assets, February has been flat so far.   Bond selling each week has detracted from the three solid days of price appreciation (Feb. 3rd, 7th and 13th) which totals 1.04%.

The S&P/LSTA U.S. Leveraged Loan 100 Index made up some ground last week as the index continued its bounce from the Feb. 5th month-to-date low of -0.11%.  The index is now slightly down for the month at -0.02% and is returning 0.6% year-to-date.  TXU continued to be a drag on the index but was also joined by Weight Watchers International whose price dropped on news that Barclays downgraded the issuer to underweight.

High Yield, as measured by the S&P U.S. Issued High Yield Corporate Bond Index, on the other hand was at the same -0.11% a day prior on Feb 4th but has been able to lift itself up to the current 0.76% MTD and is returning 1.53% year-to-date.  Oil & Gas Exploration along with Wireless are two of the larger industry segments in the index and month-to-date have contributed the most by 0.07% and 0.05% respectively.



Data as of 2/14/2014, Leverage Loan data as of 2/17/2014

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