Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $1.3 billion and year to date flows stand at $45.0 billion. New issuance for the week was $11.0 billion and year to date issuance is at $387.7 billion.
(Bloomberg) High Yield Market Highlights
- The junk-bond market is having its busiest week in about two months as borrowers look to lock in low rates before the Thanksgiving holiday. Credit risk is higher Friday amid the prospect of an end to Federal Reserve backstops.
- U.S. Treasury Secretary Steven Mnuchin requested that emergency liquidity including primary and secondary market corporate credit facilities introduced earlier in the year expire as scheduled on Dec. 31.
- “This was unexpected by investors and will likely lead to near-term underperformance, especially in short- dated credit, where valuations were too tight to begin with,” Barclays Plc credit strategists Brad Rogoff and Shobhit Gupta wrote in a note.
- It’s probably not negative for the long term though since the Fed has been willing to backstop credit valuations, they said. A new Treasury secretary under the new administration in January could also re-establish these facilities.
- Issuance volume for the week was quite strong. The volume was the most since mid-September, according to data compiled by Bloomberg.
- Average yields rose 6bps to close at 4.86% Thursday. Spreads widened 5bps to 422bps more than Treasuries.
- The broader index posted a small loss of 0.01%, the first after four sessions of gains. The index is set to end the week with modest gains of 0.6%.
- CCCs bucked the trend on Thursday, posting gains of 0.05% and are poised the end the week with returns of 0.86%, the best in the high-yield market.
(Reuters) Oil up on hopes for delay to OPEC+ supply increase, vaccine
- Oil prices firmed on Wednesday on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported.
- Crude oil futures contracts jumped by about $1 after Pfizer Inc said on Wednesday final results from the late-stage trial of its vaccine showed it was 95% effective. Last week, it had put the efficacy at more than 90%.
- Moderna Inc said on Monday that preliminary data for its vaccine also showed it was almost 95% effective.
- “Oil prices today are modestly rising on hopes that OPEC+ will decide to postpone its planned production increase in January and on the latest vaccine euphoria,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
- To tackle weaker energy demand amid a second wave of the pandemic, Saudi Arabia called on fellow members of the OPEC+ group to be flexible to meet market needs and to be ready to adjust their agreement on output cuts.
- OPEC+, comprising the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, met on Tuesday but made no formal recommendation before the group’s full ministerial meeting on Nov. 30-Dec. 1 to discuss policy.
- Members of OPEC+ are leaning towards delaying the current plan to boost output in January by 2 million barrels per day (bpd), sources have said. They are considering a possible delay of three or six months.