Category: Investment Grade Weekly

Credit spreads moved tighter this week.  The US Corporate Bond Index closed last week at 91 and had tightened to 89 as the market closed on Thursday.  The 10yr Treasury yield is lower thus far on the week to the tune of 9bps as we go to print.  The benchmark rate closed last Friday at 4.51% and it was 4.42% by Thursday’s close. Through Thursday, the Corporate Bond Index year-to-date total return was +2.08% while the yield to maturity for the Index closed the day at 5.25%.

Economics

It was a busy economic calendar this week.  Durable goods orders came in weak after previous releases were stronger than expected as firms piled on orders to get ahead of tariffs.  Consumer confidence showed a rebound in May after five straight months of declines but it still remains at depressed levels.  The latest GDP update for Q1 came in at -0.2% which, although negative, actually exceeded the estimate of -0.3%.  Finally, the most anticipated releases came on Friday morning with personal spending data and core PCE.  Headline PCE rose just 0.1% in April and the year over year measure moved to 2.1% in April from 2.3% in March.  Consumer spending fared okay in April all things considered posting a +0.2% increase led by services.  It feels a bit like a broken record to keep stating that it is simply too early to know what impact tariffs will have on inflation and consumer health but that is the reality.

Next week is another busy one that culminates in an employment report on Friday, June 6^th.  Looking further ahead, the next FOMC meeting is on June 18^th.  Interest rate futures on Friday morning are pricing just a 2.1% chance of a cut at that meeting.  For contrast, exactly one month ago, amid a bleaker outlook for global trade, those same futures were pricing a 59% chance of cut at the June meeting.  The mood of market participants has certainly changed, but we now wonder if risk assets have retraced too far?

Primary Market

It was a solid if uneventful holiday-shortened week of issuance as companies priced $21.6bln of new debt which was in line with estimates.  Volume for the month of May pushed past $152bln, making it the busiest month of May since 2020 when $242bln was borrowed as companies shored up liquidity during the early days of the pandemic.  Investor demand was strong this week and concessions were meager.  Next week dealers are looking for ~$30bln in new debt.

Flows

According to LSEG Lipper, for the week ended May 28, investment-grade bond funds reported an inflow of +$1.73bln. Total year-to-date flows into investment grade were +$9.91bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads moved materially tighter this week as investors embraced risk across all markets on the back of subsiding fears surrounding some of the worst outcomes for global trade.  The US Corporate Bond Index closed last week at 99 and had tightened to 91 as the market closed on Thursday.  The 10yr Treasury yield started the week higher on trade enthusiasm and then traded within a narrow range for most of the week.  The benchmark rate closed last Friday at 4.38% and it was 4.43% by Thursday’s close. Through Thursday, the Corporate Bond Index year-to-date total return was +1.53% while the yield to maturity for the Index closed the day at 5.30%.

Economics

There was a bounty of economic data this week.  The CPI print for the month of April was relatively benign.  Core CPI has risen 2.8% over the past year and at an annualized rate of 2.1% over the past three months, which is an improvement relative to the same time period last year.  The FOMC is likely pleased with this print but also cognizant of the fact that it does not fully reflect the rapid change in trade policy.  Retail sales were slightly better than expectations for the month of April and March data was revised higher but, again, there was much noise in the data due to tariff impacts and it will take some time to see how much spring spending was pulled forward by consumers in order to get ahead of price increases.  Both small business and consumer confidence continued to decline, which could impact labor demand and consumer spending in the future.  Finally, housing starts posted a nice bump in April but a deeper dive into the data showed a collapse in building permits suggesting weaker activity in the ensuing months.

Next week is a very light calendar of economic data domestically.  Globally, both the UK and Japan will release inflation numbers that could give investors an idea of what those central bank’s will be looking to do with their policy rates.

Primary Market

It was a brisk week for issuance as companies priced $40bln in new debt besting projections of $35bln.  Concessions were reasonable and investor demand was solid putting the primary market in a “well balanced” state in our view.  To expand a bit on our thoughts, we viewed pricing for most issues this week as favorable against a demand backdrop that was good but not great.  It can be difficult to extract value from the primary market when demand investor demand is voracious, as that type of environment can lead to less favorable pricing.  Next week is expected to be on the lighter side with syndicate desks looking for $25bln in primary volume.

Flows

According to LSEG Lipper, for the week ended May 14, investment-grade bond funds reported an inflow of +$1.86bln. This broke a 7-week streak of trade-turmoil outflows.  Total year-to-date flows into investment grade were +$6.649bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads were listless this week, drifting wider through the first four trading days of the period before they snapped tighter Friday on the back of a stronger than expected payroll release for the month of April.  The US Corporate Bond Index closed last week at 101 and had moved out to 106 by Thursday.  Most bonds are 2-3bps tighter on Friday.  The 10yr Treasury was in risk-off mode this week until Friday when the yield gapped higher after strong job numbers.  The benchmark rate closed last week at 4.24% and is wrapped around 4.33% as we go to print this Friday afternoon. Through Thursday, the Corporate Bond Index year-to-date total return was +1.90% while the yield to maturity for the Index closed the day at 5.22%.

Economics

Economic data was very mixed this week.  Consumer confidence continued to drop and details of that report showed that consumers have an increasingly negative view of the future.  However, personal income and spending continue to hold up but it will remain to be seen how much of this spending was pulled forward to get ahead of tariffs.  The initial GDP estimate showed that the economy contracted -0.3% during the first quarter but trade had an outsize impact on that number.  Finally on Friday, the jobs report was better than expected and while the labor market is showing some signs of deterioration it is not yet in contraction and layoffs have yet to become a widespread issue.  Bottom line, it is a very uncertain economic environment and backward-looking data may not be the best indicator of how the economy will behave in the future.  The consumer continues to be the straw that stirs the drink so we will be watching income and spending patterns closely as they have historically gone hand in and hand as the keys to the US consumer-driven economy.

Next week the data is on the lighter side but we will hear from the FOMC on Wednesday.  Interest rate futures are pricing just a 3.2% chance of a cut as we go to print but investors will be listening closely to Jerome Powell’s press conference.  The market is currently pricing the July FOMC meeting as having a relatively high probability (70.8%) for the first cut of 2025.

Flows

According to LSEG Lipper, for the week ended April 30, investment-grade bond funds reported their sixth consecutive weekly net outflow, this time at -$2.2bln.  Total year-to-date flows into investment grade funds remained positive at +$4.15bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads were wider again this week. The OAS on the corporate index closed at 114 on Thursday evening after ending the week prior at a spread of 109.  Although it has been a volatile April, the IG market has behaved in a very orderly manner.  The plumbing of the market is well intact with a variety of buyers and sellers transacting in normalized volumes and the new issue market is open for companies that want to borrow.  The 10yr Treasury has been all over the map this month.  The benchmark rate closed last week at 3.99% moving higher throughout this week to close Thursday at 4.42%.  It is over 10bps higher again this morning as we go to print and there is plenty of speculation as to the reasons why.  Suffice to say the Treasury market is highly complex and there is not a single definitive answer to the reason behind its price action.  This is why CAM does not speculate on the direction of interest rates.  We focus on credit risk which is much more controllable.  One thing we do know is that Wednesday’s 10yr Treasury auction showed strong demand from buyers and there is no shortage of a bid for UST bonds as the 30yr auction was also strong.  Through Thursday, the Corporate Bond Index year-to-date total return was -0.09% while the yield to maturity for the Index closed the day at 5.49%.

Economics

Major data this week was not released until Thursday and Friday but for the second week in a row it did not garner much attention as investors were focused on the volatility that is occurring in the here and now.  The consumer price index (CPI) surprised to the downside with a softer inflation print relative to expectations.  U.S. wholesale prices (PPI) also fell much more than expected.  Both of these releases were positive for declining inflation but they were dismissed by the market due to their backward-looking nature and with inflationary tariffs looming.

Next week the highlights include retail sales, industrial production and housing starts.

Interesting Anecdotes

Deutsche Bank research published a midweek note showing recession pricing based on credit spreads.  This puts some context around recent spread widening across credit markets.  Unsurprisingly, higher quality credit spreads are pricing less risk than lower quality given that IG-rated companies are broadly better positioned to navigate a slowing economic environment.

On Thursday, Barclays research published an analysis showing that, in the first quarter, Friday trading of index-eligible IG and HY corporate bonds in the U.S. hit the highest level since 2013, making up 18% of weekly volumes.  Barclays goes on to surmise that the most likely explanation is that, with rising volatility in the quarter, institutional investors were adjusting their positions on Fridays to hedge against potential market volatility over the weekend.  We believe that this definitely played a part but we would also give credit to the fact that the first quarter experienced a record amount of issuance which would have also fed through to elevated trading volumes.  Especially considering that most of the volatility occurred in the month of March while the first two months of the year were relatively benign.  CBOE Volatility Index (VIX) values below 20 are typically viewed as a sign of stability in the markets and the VIX did not close above 20 in 2025 until February 27.

Issuance

Although it was a light week for issuance, it surpassed last week’s paltry total, an encouraging sign that the IG primary market is open for business.  Borrowers priced $9bln this week with most of that coming on Thursday, as four borrowers forged ahead to print $5.25bln that day.  New issue concessions were elevated (and attractive in our view) this week and investor demand was plentiful.  The outlook for next week is uncertain and will ultimately be driven by market sentiment.  It would not surprise us if there were a huge week for issuance if the fervor subsides or it could be another light week if risk assets remain volatile.

Flows

According to LSEG Lipper, for the week ended April 9, investment-grade bond funds reported their third net outflow of the year at -$6.08bln.  This was the third consecutive week of negative flows.  Total year-to-date flows into investment grade funds remained positive at +$13.23bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads will finish this week much wider. The OAS on the corporate index closed at 102 on Thursday evening after ending the week prior at a spread of 93 and the IG credit market is generically 10bps wider as we go to print mid-morning on Friday.  The 10yr Treasury yield rallied after Wednesday’s tariff announcement, moving from 4.25% at the end of last week to 4.03% at Thursday’s close.  The benchmark rate is rallying again this Friday morning and is another 13bps lower at press time on the back of China’s retaliatory tariff response and weakness in global equity markets. IG credit is hanging in there for now and doing its job as a tool for diversification.  Through Thursday, the Corporate Bond Index year-to-date total return was +2.82% while the yield to maturity for the Index closed the day at 5.06%.

Economics

The data this week took a back seat to global trade.  The U.S. tariff announcements on Wednesday roiled global markets causing a rout in equities and wider credit spreads.  U.S. Treasuries were a safe haven for investors and yields plunged.  Friday’s employment report for the month of March was solid as payrolls posted a broad advance, easily besting the consensus number.  The unemployment rate ticked higher from 4.1% in February to 4.2% for March.  Markets paid little mind to the positive report with some investors dismissing it as backward-looking relative to the uncertainty regard trade. Traders are now trying to figure out how to navigate a global trade war as China announced retaliatory tariffs on Friday.  It appears that there will not be a quick resolution on trade and that volatility is here to stay.

Looking ahead, all eyes will be on Fed chairman Jerome Powell who is slated to speak later this Friday morning.  Major data releases next week include CPI and PPI, both in the latter half of the week.

Issuance

It was a very light week in the primary market which is no surprise considering the volatile backdrop.  Just four firms sold $6bln of new debt relative to the $20bln estimate.  The outlook for next week is murky and will be dependent on the market tone –dealers are estimating $10-$15bln of new supply.

Flows

According to LSEG Lipper, for the week ended March April 2, investment-grade bond funds reported their second net outflow of the year at -$353mm.  This was the second consecutive week of modestly negative flows.  Total year-to-date flows into investment grade funds are still soundly positive at +$19.31bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads look set to finish slightly wider this week with the OAS on the corporate index closing at 91 on Thursday evening after ending the week prior at a spread of 90.  The 10yr Treasury yield rose throughout the week and was 11 basis points higher during the period through Thursday but the benchmark rate is rallying amid a risk-off tone as we go to print this Friday afternoon and is currently only 3bps higher on the week.  Through Thursday, the Corporate Bond Index year-to-date total return was +1.59% while the yield to maturity for the Index closed the day at 5.24%.

Economics

Investors continue to search for answers as the economic data this week did not do much to absolve the wall of worry that continues to weigh on risk assets.

Consumer confidence data continued its decline as the Expectations Index for the month of March fell to its lowest point in a dozen years.  On the bright side, new home sales posted a modest gain for the month of February giving some hope that demand will impress during the spring selling season.  Durable goods also came in better than expectations but it is hard to feel too good about this data with uncertainty surrounding trade policy and tariffs.  On Thursday, Q42024 GDP came in stronger than estimates but accompanying trade data for February was ugly for Q12025 GDP.  Finally on Friday we got some negative news with PCE (Fed’s preferred inflation gauge) and spending data.  Inflation came in slightly hot relative to expectations and personal spending was woeful.  Time will tell if this was a temporary blip or the beginning of a weakening trend for the consumer.

Next week the data is a little lighter and less meaningful in the first part of the week before we get the March unemployment report on Friday morning.

Issuance

The primary market exceeded expectations this week as more than $41bln of new debt was priced by a bevy of eager borrowers.  Although there is one trading day left in the month that will likely have some new issuance, 2025 has already eclipsed 2024 as the busiest on record for a first quarter.

Next week is expected to be a lighter one with tariffs looming and syndicate desks are looking for just $20bln of new supply.

Flows

According to LSEG Lipper, for the week ended March 26, investment-grade bond funds reported their first net outflow of the year at -$406mm.  Total year-to-date flows into investment grade funds were +$19.66bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads clawed their way back from the wides of last week and are poised to finish the period tighter.  The OAS on the Corporate Index was 3 basis points tighter this week through Thursday. The 10yr Treasury yield inched lower throughout the week as investors remained wary of risk assets.  The 10yr was 7bps lower through Thursday.  Through Thursday, the Corporate Bond Index year-to-date total return was +2.49% while the yield to maturity for the Index closed the day at 5.13%.

Economics

The data this week yielded some mixed messages.  Retail sales on Monday were soft as February sales advanced just +0.2% but the bigger news was a revision of January’s data that made it the largest monthly decline since 2021.  There were some bright spots for the home construction market on Tuesday as housing starts showed a rebound for the month of February but permitting activity suggested a slowdown in future months.  Staying with the housing theme for a moment, Thursday also had a positive release for existing home sales as they surprised to the upside for February, but affordability concerns remain a headwind.  Wednesday’s FOMC release was unsurprising as the committee elected to hold rates steady.  Commentary from Chairman Powell was viewed by investors as having a dovish tilt, and we agree, but the dot plot was slightly more hawkish than the prior release.  The updated dot plot median expectations were unchanged with most members expecting 50ps worth of cuts by the end of 2025.  However, examining the details, there were more policymakers expecting zero or just one cut than there were in December.  Recall that the Summary of Policy Expectations (dot plot) is released every three months so we will not get our next update until the FOMC release on June 18.

There are now plenty of diverging views among investors and street economists with regard to the Fed’s policy rate.  At Thursday’s close, interest rate futures were pricing 2.7 cuts by the end of 2025.  There are some strategists predicting no cuts at all and then there are those in the recession/slow down camp that are predicting 3+ cuts.  There were some calling for hikes but they seem to have gone into hiding for now.  We view this Fed as being data dependent with a dovish bias and believe that 1 or 2 cuts before the end of 2025 as the most likely outcome.

Next week brings plenty to parse with new home sales, consumer confidence, durable goods, GDP, personal consumption, and finally on Friday we get the Fed’s preferred inflation gauge with the release of Core PCE.

Issuance

The new issue market for corporate bonds was in line with expectations this week as borrowers priced $33bln of new debt relative to the $35bln estimate.  Concessions were narrower this week amid a more positive backdrop for credit than what we saw for most of the prior two weeks.  YTD activity has been brisk thus far with $490bln of new issue, just -2% off 2024’s pace.  Next week, syndicate desks are looking for around $30bln of new supply.

Flows

According to LSEG Lipper, for the week ended March 19, investment-grade bond funds reported a net inflow of +$336mm.  Total year-to-date flows into investment grade funds were +$20.07bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads moved meaningfully wider this week in sympathy with the rout in equities but the credit market has a more optimistic vibe as we go to print Friday morning.  The OAS on the Corporate Index was 10 basis points wider on the week, closing at 97, its widest level of 2025 and the widest going back to early September 2024.  It is worth noting that the move in credit spreads was extremely orderly relative to equities and the new issue market remained open.  The 10yr Treasury was relatively stable during the week, especially compared to risk assets.  The benchmark rate was 3bps higher on the week through Thursday.  Through Thursday, the Corporate Bond Index year-to-date total return remained in positive territory at +1.73% while the yield to maturity for the Index closed the day at 5.22%.

Economics

Investors remained focused on the possibility of a slowing U.S. economy as they watched the data this week.  Midweek headline CPI and PPI prints came in lower than expectations.  These releases are not as meaningful to the FOMC as February PCE which will be released on March 28.  Friday brought some gloomy data with the release of the U-Mich. Consumer sentiment data which showed that consumer long-term inflation expectations hit a 32-year high.

Next week’s focus will be on retail sales, housing starts and the FOMC meeting.  Interest rate futures are pricing in a 99+% chance of no change in the Fed’s policy rate at the conclusion of that meeting on Wednesday.  Looking ahead, traders expect ~2.7 cuts before year end with them likely occurring in June and September.  To be clear, market sentiment and economic data can send those expectations in either direction at any given time.

Issuance

The new issue market remained active and healthy this week amid heightened volatility.  Companies priced $35bln in new bonds which fell short of the $45bln estimate.  Both Monday and Thursday saw some issuers stand down preferring to wait for quieter days to tap the market.  Syndicate desks are looking for around $35bln of issuance next week and Monday is poised to be especially busy as rumor has it that more than a dozen companies will look to front-run the FOMC meeting if the tone is receptive.  Issuers have historically avoided bringing new deals coincident with FOMC releases just to avoid any market surprises from the release itself or the ensuing press conference.

Flows

According to LSEG Lipper, for the week ended March 12, investment-grade bond funds reported a net inflow of +$942mm.  Total year-to-date flows into investment grade funds were +$19.74bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads showed some stability this week which was impressive given the deluge of new issue supply.  It looks as though the period will finish on a positive note based on price action this Friday morning.  The OAS on the Corporate Index was unchanged at 87 basis points this week through Thursday.  The 10yr Treasury yield rallied on Monday amid a risk-off sentiment before inching higher throughout the rest of the week.  The benchmark rate was 7bps higher on the week through Thursday.  Through Thursday, the Corporate Bond Index year-to-date total return was +2.10% while the yield to maturity for the Index closed the day at 5.15%.

Economics

Growth concerns were top of mind for market participants this week and Monday’s PMI report enforced some of those fears as the overall index came in lighter than expectations with a big jump in the Prices Paid component, likely due to the potential impact of tariffs.  On the positive side, the ISM service index release showed an increase and it has now expanded in 54 of the past 57 months.  Finally, Friday’s payroll report was slightly lower than expected in terms of jobs added during February and the unemployment rate ticked higher from 4.0% to 4.1% but both numbers were well within the margin of error and stocks actually staged a brief relief rally on the back of the release.

Next week has some economic prints of note.  Things start to ramp up on Wednesday with a CPI release followed by PPI measures on Thursday.  Looking further ahead, the FOMC will meet for the first time since the end of January on March 19.

Issuance

There were lofty expectations ($50bln) for issuance this week and they were exceeded in a big way.  Mars Inc. led the way with a $26bln jumbo deal enroute to a $73bln week that saw dozens of companies tap the market.  It was the busiest week for the primary market since the first week of September 2024 when $80bln printed.  Syndicate desks are looking for more action next week with estimates calling for $45bln in new supply.  Investors have plenty of cash to put to work and are still finding good value with most borrowers paying more than 5% to issue intermediate bonds.  Looking at it from the standpoint of the borrowers, costs are elevated relative to the low-rate era but the cost of capital is still reasonable for large healthy companies when viewed through the lens of an overall capital allocation framework.  This has served to create a win-win type of environment for both investors and borrowers. Year-to-date issuance has now surpassed $420bln which just slightly trails (-3% y/y) 2024’s pace.

Flows

According to LSEG Lipper, for the week ended March 5, investment-grade bond funds reported a net inflow of +$2.6bln.  Total year-to-date flows into investment grade funds were +$18.8bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads finally experienced their first bout of widening in 2025.  Now, to be clear, we are not talking about much of a move in the grand scheme of things. Although the index closed Thursday at its widest level of 2025 it sits only 7 basis points off the tights.  The OAS on the Corporate Index moved 4 basis points wider week over week through Thursday February 27.  The 10yr Treasury yield rallied hard and moved 17 basis points lower over the same time period.  Through Thursday, the Corporate Bond Index year-to-date total return was +2.29% while the yield to maturity for the Index closed the day at 5.12%.

Economics

Tuesday saw a pessimistic consumer confidence print as the measure posted its biggest drop since 2021 and is now sitting at an eight-month low.  This prompted Treasury yields to move lower.  On Wednesday we got data that showed that elevated mortgage rates and bad weather continued to weigh on new home sales, as they declined 10.5% during January.  On Thursday the durable goods release was solid but some areas were weak and it may be that the pop in the indicator was an attempt by buyers to get ahead of tariffs.  Friday the data was mixed as inflation came in line with expectations while income surprised to the upside but spending underwhelmed.

Next week the highlights include ISM manufacturing/services, auto sales and the unemployment report for the month of February.

Issuance

It was another solid week of issuance as wider spreads did nothing to stop issuer enthusiasm.  More than $51bln of new debt was priced during the last week of February, pushing the monthly total to nearly $161bln.  Note that this is 8% shy of what dealers were expecting for the month ($175bln) but was still the second busiest February on record, eclipsed only by last year’s total of $197bln.  Year-to-date issuance has now eclipsed $347bln.

With the move lower in Treasury yields more than offsetting the move wider in spreads the funding environment is as attractive as it has been at any point this year.  Next week could get things off to a hot start for the month of March with more than $50bln of issuance.

Flows

According to LSEG Lipper, for the week ended February 26, investment-grade bond funds reported a net inflow of +$2bln.  Total year-to-date flows into investment grade funds were +$16.2bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.