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US Treasury yields were 2-3bp higher on Monday. Chicago Fed President Austan Goolsbee commented that he was surprised by the market’s reaction to the FOMC meeting last week. Regarding rate cuts, he said that Fed members “don’t debate specific policies speculatively about the future”. Also Cleveland Fed President Loretta Mester said that markets went “a little bit ahead” to looking at rate cuts while the Fed’s policy was primarily regarding how long they wanted monetary policy to remain restrictive. US credit markets saw IG CDS spreads widen by 0.4bp while HY spreads tightened by 0.6bp. In US equity markets, S&P and Nasdaq were up 0.5-0.6%.
European equity markets ended mixed. In credit markets, European main CDS spreads were 1.2bp wider and crossover spreads widened by 4.1bp. Asian equity markets have opened mixed today. Asia ex-Japan IG CDS spreads were flat.
Cixi State-Owned Assets raised $200mn via a 3Y sustainability bond at a yield of 5.8%, 50bp inside initial guidance of 6.3% area. The senior unsecured bonds have expected ratings of BBB (Fitch) and have a change of control put at 101. Proceeds will be used for project development and to replenish working capital, in accordance with the sustainable finance framework.
Fitch Revises Meituan’s Outlook to Positive; Affirms at ‘BBB-‘
Consent solicitation is an offer by the issuer to change the terms of the security agreement. These are applicable for changes to bonds or shares issued and can range from distribution payment changes and covenant changes in bonds to changes in the board of directors with regard to equities.
On Long-Dated Treasuries Enter Bull Market as Fed Pivot Feeds Rally
Kellie Wood, deputy head of fixed income at Schroders
“This is totally a case of FOMO. Retail investors have been waiting to see more positive returns from fixed income before allocating after many years of negative returns.”
On Bond Managers Seeking to Win Back Clients with $6tn in Funds
Rich Kushel, the head of BlackRock PMG
“We are in a winner-takes-a lot moment. If you’re truly adding real alpha, there will always be a place for you… folks who haven’t, you might as well buy AGG”
Matthew Steinaway, CIO of Global FICC at State Street
“The large institutional managers are pivoting toward using indexing as a core”
Dan Ivascyn, CIO at PIMCO
“We just have to put up good returns. If you generate value versus passive alternatives, flows are going to come in”
“It’s not what you say or what the (Fed) Chair says, it’s what do they hear and what do they want to hear? … was the market just imputing ‘Here’s what we want them to be saying.’ I thought there seemed to be some confusion about how the FOMC even works… We don’t debate specific policies speculatively about the future”
On March Fed Rate Cut Hopes Being Premature – BlackRock’s CIO of Global Fixed Income, Rick Rieder
“Today’s re-trenchment makes some sense to me”… reflects the fact that Fed Chair Jay Powell didn’t intend to be “that aggressive about starting to cut this quickly”… What was most interesting about Powell is there was no pushback on financial conditions easing… a pretty stark contrast to where they were a few weeks ago”