Category: Uncategorized

14 Oct 2022

CAM High Yield Weekly Insights

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were -$1.0 billion and year to date flows stand at -$61.7 billion.  New issuance for the week was $1.2 billion and year to date issuance is at $89.6 billion.


(Bloomberg)  High Yield Market Highlights

  • U.S. junk bonds shrugged off the equity rally as yields climbed toward 10%. CCC yields, the riskiest of junk bonds, jumped to a 30-month high of 15.79% after core US inflation rose by more than forecast, pressuring the Federal Reserve to keep raising interest rates again. Junk bonds are set to end the week with a decline, heading for a fourth weekly loss in five. The bonds were down 1.2% so far this week as yields rose to 9.70%.
  • The rise in core consumer price index only reinforced the Fed officials’ commitment to raise rates to a restrictive level in the near term and holding them there to curb inflation.
  • The heightened asset volatility, as the Fed is expected to hike another 75bp in November with core inflation at multi-decade highs, increases tail risks for the economy and markets, Barclays’s Brad Rogoff wrote on Friday.
  • The losses spanned across ratings in junk bond market, with CCCs posting losses of 1.44% week-to- date, the most in two weeks.
  • Macro volatility, steady losses and continuing concern that the Fed may disrupt growth rattled junk bond investors.
  • The high yield primary market volume has been low amid rising cost of debt.
  • Third quarter supply was a modest $19b, the lowest 3Q volume since 2008.
  • New bond sales in September totaled $9b, the slowest September since 2011.
  • Year-to- date volume was at $88b, the lowest since 2008 and down about 78% from 2021.



(Bloomberg)  Core US Inflation Rises to 40-Year High, Securing Big Fed Hike

  • A closely watched measure of U.S. consumer prices rose by more than forecast to a 40-year high in September, pressuring the Federal Reserve to raise interest rates even more aggressively to stamp out persistent inflation.
  • The core consumer price index, which excludes food and energy, increased 6.6% from a year ago, the highest level since 1982, Labor Department data showed Thursday. From a month earlier, the core CPI climbed 0.6% for a second month.
  • The overall CPI increased 0.4% last month, and was up 8.2% from a year earlier.
  • The advance was broad based. Shelter, food and medical care indexes were the largest of “many contributors,” the report said. Prices for gasoline and used cars declined.
  • On the heels of a solid jobs report last week, the inflation data likely cement an additional 75-basis point interest rate hike at the Fed’s November policy meeting and spurred speculation for a fifth-straight increase of that size in December. Traders also priced in a higher peak Fed rate for next year.
  • Policy makers have responded with the most aggressive tightening campaign since the 1980s, but so far, the labor market and consumer demand have remained resilient. The unemployment rate returned to a five-decade low in September, and businesses continue to raise pay to attract and retain the employees needed to meet household demand.
  • The CPI report is the last one before next month’s U.S. midterm elections and poses fresh challenges to President Joe Biden and Democrats as they seek to retain thin congressional majorities. Already, the surge in inflation has posed a serious threat to those prospects.
  • Shelter costs — which are the biggest services’ component and make up about a third of the overall CPI index — rose 0.7% for a second month. Both rent of shelter and owners’ equivalent rent were up 6.7% on an annual basis, the most on record.
  • Economists see the housing components of the report as being elevated for quite some time, given the lag between real-time changes in rents and home prices and when those are reflected in Labor Department data. Bloomberg Economics doesn’t expect year-over-year rates for the major shelter components to peak until well into the second half of next year.
  • While the Fed bases its 2% target on a separate inflation measure from the Commerce Department — the personal consumption expenditures price index — the CPI is closely watched by policy makers, traders and the public.
  • Fed officials have repeatedly emphasized in recent weeks the need to get inflation under control, even if that means higher unemployment and a recession. In minutes from their September meeting released Wednesday, many policy makers emphasized “the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.”




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.

07 Oct 2022

CAM High Yield Weekly Insights

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were $0.8 billion and year to date flows stand at -$60.7 billion.  New issuance for the week was nil and year to date issuance is at $88.3 billion.


(Bloomberg)  High Yield Market Highlights

  • U.S. junk bonds were headed for a weekly gain heading into the jobs report on Friday morning, as yields moved to 9.13% from 9.88%, the highest since April 2020.
  • The gains came amid weak US manufacturing data and a 14-month low in US job openings.
  • The junk-bond rally followed a broad risk-on move as equities rebounded from the worst monthly loss in more than two years in September.
  • Still, the gains may be short-lived as Fed officials warn that market expectations for a pivot are misplaced and that there’s a need to boost rates to “restrictive territory.”
  • Continuing macro uncertainty, rising oil prices and steadily rising yields have turned issuers away from the primary market.
  • The sudden rally in junk bonds after the September losses brought investors back to the asset class with a cash inflow of just under $1b this week.


(Bloomberg)  US Jobs Rise While Unemployment Drops, Keeping Pressure on Fed

  • U.S. employers continued to hire at a solid pace last month and the jobless rate unexpectedly returned to a historic low, indicating a sturdy labor market that puts the inflation-focused Federal Reserve on course for another outsize interest-rate hike.
  • Nonfarm payrolls increased 263,000 in September after a 315,000 gain in August, a Labor Department report showed Friday. The unemployment rate unexpectedly dropped to 3.5%, matching a five-decade low. Average hourly earnings rose firmly.
  • The median estimates in a Bloomberg survey of economists called for a 255,000 advance in payrolls and for the unemployment rate to hold at 3.7%. Hiring was relatively broad based, led by gains in leisure and hospitality and health care.
  • The figures are the latest illustration of the perennial strength of the US job market. While there have been some indications of moderating labor demand — most notably a recent decline in job openings and an uptick in layoffs in some sectors — employers, many still short-staffed, continue to hire at a solid pace. That strength is not only underpinning consumer spending but also fueling wage growth as businesses compete for a limited pool of workers.
  • The Fed, meanwhile, is hoping to see a significant softening in labor market conditions, with the goal of cooling wage growth and ultimately inflation. While the payrolls advance was the smallest since April 2021, policy makers are watching to see if their rate hikes spur an increase in the unemployment rate.
  • This is the last jobs report Fed officials will have in hand before their November policy meeting as they consider a fourth-straight 75-basis point interest-rate hike. Fresh inflation data out next week will also play a fundamental role in their decision making. The report is projected to show the depth and breadth of the Fed’s inflation problem, with a key gauge of consumer prices potentially worsening.
  • The labor force participation rate — the share of the population that is working or looking for work — eased to 62.3%. Among those ages 25 to 54, it also dipped.
  • The jobs report showed average hourly earnings were up 0.3% from August and up 5% from a year earlier, a slight deceleration from the prior month but still historically elevated. The solid increase suggests the Fed will have to continue to raise interest rates as it aims to rein in rapid wage growth that has bolstered household spending.
  • Central bank officials have been clear recently about their commitment to taming inflation, even if that leads to higher unemployment and recession, because they say that failing to do so would be worse for Americans. Fed Chair Jerome Powell said last month that slower growth and a softer labor market are painful for the public, but that there isn’t a “painless” way to get inflation down.


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.

02 Aug 2019

CAM High Yield Weekly Insights

CAM High Yield Market Note



Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were -$0.7 billion and year to date flows stand at $15.6 billion. New issuance for the week was $4.5 billion and year to date HY is at $155.1 billion, which is +35% over the same period last year.


(Bloomberg) High Yield Market Highlights


  • Rising trade tensions, volatile stocks and outflows from high-yield funds are likely to keep U.S. junk bond prices under pressure and may stall a recent burst of activity in the new issue market.
  • U.S. corporate high-yield funds reported an outflow for the week. This marks the first time in the last eight weeks that the high-yield market has seen an outflow
  • Spreads widened by 17 basis points to 388bps over U.S. Treasuries while yields rose. Yields, however, remain below 6% which is still attractive borrowing rates for companies
  • July was the third busiest month this year as LBOs and M&As accounted for 43% of issuance, the most this year
  • Junk YTD returns are 10.477%, off the 10.57% highs of this year
  • BB were at 11.188% after a gain of 0.29%
  • Single Bs stood at 10.68% after a loss of 0.14%
  • CCCs lost the most posting 0.26%, the biggest one day loss in five weeks. taking the YTD to 7.481%
  • Loans returns were at 6.58% YTD  


  • (The Hill) T-Mobile, Sprint deal at final major hurdle
  • The $26 billion T-Mobile–Sprint deal faces one last major hurdle as a group of state attorneys general look to block the telecommunications mega-merger in court.
  • The controversial deal — which would combine two of the country’s top national mobile carriers into one company valued at $146 billion — has already cleared a series of pivotal regulatory hurdles this month.
  • The Department of Justice (DOJ) greenlighted the deal last week, and the Republicans on the Federal Communications Commission (FCC) signaled they are ready to sign off on the plan.
  • Now, critics of the deal are turning their focus to the legal challenge from state attorneys general, saying it is the most significant hurdle the merger still has to clear.
  • The group of 13 attorneys general, along with Washington, D.C., are moving forward with their litigation to block the merger, which they officially announced last month — even before the DOJ announced its decision on the deal.

(Business Wire) The GEO Group Reports Second Quarter 2019 Results


  • The GEO Group, a fully integrated equity real estate investment trust (“REIT”) and a leading provider of evidence-based offender rehabilitation and community reentry services around the globe, reported its financial results for the second quarter of 2019.
  • GEO reported second quarter 2019 net income attributable to GEO of $41.9 million, or $0.35 per diluted share, compared to $37.4 million, or $0.31 per diluted share, for the second quarter 2018. GEO reported total revenues for the second quarter 2019 of $614.0 million up from $583.5 million for the second quarter 2018. Second quarter 2019 results reflect $2.6 million in start-up expenses, pre-tax, and a $5.7 million loss on the extinguishment of debt, pre-tax, related to the recent amendment and extension of GEO’s senior revolving credit facility and the recent refinancing of non-recourse senior secured debt associated with the development of the Ravenhall Correctional Centre in Australia. Excluding these items, GEO reported second quarter 2019 Adjusted Net Income of $49.4 million, or $0.41 per diluted share.
  • GEO reported second quarter 2019 Normalized Funds From Operations (“Normalized FFO”) of $66.6 million, or $0.56 per diluted share, compared to $57.7 million, or $0.48 per diluted share, for the second quarter 2018. GEO reported second quarter 2019 Adjusted Funds From Operations (“AFFO”) of $83.4 million, or $0.70 per diluted share, compared to $72.2 million, or $0.60 per diluted share, for the second quarter 2018.
  • George C. Zoley, Chairman and Chief Executive Officer of GEO, said, “We are pleased with our strong quarterly performance and our outlook for the balance of the year, which reflect strong fundamentals and growing earnings. We are scheduled to activate 5,700 beds in the second half of the year, including 4,600 previously idle beds. We are proud of the success of our GEO Continuum of Care enhanced rehabilitation and post-release programs. We remain focused on effectively allocating capital. We believe that our current dividend payment is supported by predictable cash flows, and we expect to apply our increasing excess cash towards paying down debt.”

(Bloomberg) HCA’s Quarter Misses but Guidance Is Raised


  • Post-2Q Earnings Outlook: HCA management raised 2019 Ebitda guidance by $75 million at the midpoint to $9.6-$9.85 billion after what appeared to be a luckluster quarter. The raise indicates HCA’s confidence that Ebitda can return to 6% growth, or the upper range of the company’s long-term 4-6% target. Furthermore, the 2018 revenue benefit from graduate medical-education programs was a headwind to 2Q Ebitda growth and recent acquisitions pressured margins. Labor, supplies and operating expenses per adjusted admission growth on a same-facility basis were in-line with expectations and recent trends.
  • Revenue increased 4.3% on a same-facility basis, slightly below recent trends, driven by solid volume but lower pricing. Softer pricing in the quarter is attributed to lower acuity volume and fewer inpatient surgeries.


07 Jun 2019

CAM Investment Grade Weekly Insights

CAM Investment Grade Weekly

It was a bit of a see-saw week in the corporate market as the tone was very heavy on Monday but sentiment turned decidedly more positive on Tuesday and remained so throughout the rest of the week.  The OAS on the corporate index opened the week at 128 and widened to 130 going into Tuesday morning but we sit back at the 128 level as we go to print on Friday morning.  The biggest story of the week is Treasury yields, which are lower across the curve for the second consecutive week.  The 10yr Treasury is over 5 basis points lower on the week and sits at its lowest level of 2019 and the lowest levels we have seen since September 2017.


$23.4bln in new corporate debt was brought to the market this week.  New issue concessions remain low, having averaged 3.5bps thus far in 2019 according to data compiled by Bloomberg.  Of course, every deal is different and some deals have enjoyed more substantial concessions than others.  Year-to-date corporate supply has crossed the half trillion mark and sits at $511.1bln, which lags 2019 issuance by over 9% according to data compiled by Bloomberg.

According to Wells Fargo, IG fund flows during the week of May 30-June 5 were +$6.2bln.  This brings YTD IG fund flows to +$125bln.  2019 flows to this juncture are up 4.8% relative to 2018.


(Bloomberg) Fiserv’s Expected Jumbo M&A Deal Makes an FX Pivot

  • A highly-anticipated Fiserv jumbo M&A bond deal never materialized Thursday as the company announced plans for a European roadshow, calling into question how big the dollar leg will be. Many had expected up to a $12 billion transaction funded solely in the U.S. currency. Meanwhile, two deals moved forward pricing $810 million.
  • While it didn’t bring a deal, Fiserv did, unexpectedly, announce a EUR and/or GBP roadshow just as Mario Draghi was declaring that the ECB won’t shy away from action to support the euro-area economy during a period of weakening growth. A dovish ECB and low rates potentially going lower may have contributed to Fiserv’s decision to test alternative currencies. We have seen a surge in reverse yankee issuance for exactly this reason
  • The stage seemed set for Fiserv to bring high-grade’s first jumbo deal since Bristol-Myers and IBM priced nearly $40b in acquisition-related funding for Celgene and Red Hat, respectively. Equity futures were in the black, IG CDX opened tighter and Wednesday’s two biggest deals from HCA and Parker-Hannifin were trading though new issue levels after achieving strong primary pricing outcomes. From an economics perspective, if you’re a believer in the correlation of ADP and nonfarm payrolls, Thursday offered a brief window ahead of a potentially weak jobs report. This, all amid an irrefutably stronger primary market backdrop that had steadily improved over the week.
  • Should Fiserv elect to predominantly tap the European debt capital markets it will be the second time in under a month that an issuer bringing an M&A deal has gone overseas for the majority of the funding. Fidelity National Services elected to fund just USD1b after launching EUR5b and GBP1.25b for their Worldpay acquisition. People with knowledge of the deal expected a much larger greenback portion. So much so that the USD-leg was more than 8 times oversubscribed in less than two hours.


 (Bloomberg) U.S. Payrolls, Wages Cool as Trade War Weighs on Economy

  • S. employers added the fewest workers in three months and wage gains cooled, suggesting broader economic weakness and boosting expectations for a Federal Reserve interest-rate cut as President Donald Trump’s trade policies weigh on growth.
  • Nonfarm payrolls rose 75,000 in May after a downwardly revised 224,000 advance the prior month, according to a Labor Department report Friday. The increase missed all estimates in Bloomberg’s survey calling for 175,000. The jobless rate held at a 49-year low of 3.6% while average hourly earnings climbed 3.1% from a year earlier, less than projected.
  • The dollar and Treasury yields fell as the data signaled the labor market — a pillar of strength for an economy headed for a record expansion — was facing new pressures even before Trump threatened tariffs on Mexican goods in addition to proposed higher levies on Chinese imports. Retail sales, factory output and home purchases have shown the economy struggling this quarter after better-than-expected growth in the first three months of the year.


(Forbes) Intel Charts A New Course With 10th Gen Core And Project Athena

  • Likely the most anticipated product that Intel revealed at Computex was its 10th Gen Core processors code-named Ice Lake. These 10th Gen Core processors utilize a new Sunny Cove CPU architecture and are built with Intel’s much awaited 10nm process node, which previously had some issues regarding yields that Intel claims are now resolved. Intel says these issues are behind them and that we can see volume production of 10nm with this 10th Gen of Core processors. These new Ice Lake processors also feature the new Gen11 graphics chip, which should elevate Intel’s performance in integrated graphics further to enable even better entry-level gaming. The 10th Gen Core processors announced at Computex range from Core i3 up to Core i7, with up to 4 cores and 4.1 GHz max turbo frequency. These processors target 2-in-1 and thin and light laptop form factors, so having a 4.1 GHz max turbo frequency AND 1.1 GHz GPU frequency is quite impressive.
  • Intel claims the Iris Plus graphics inside of the 10th Gen core processors (based on their Gen11 graphics) provide double the performance over the previous generation in some benchmarks. The company also claims double the HEVC encode performance, which should help with creative people wanting to do on-the-go video editing. Additionally, Intel claims double the FPS in 1080P games. While this would obviously be a pretty significant improvement, it will likely depend heavily on how the thermals are managed by the device manufacturer and over what period.
  • Intel also integrated both Thunderbolt 3 and Wi-Fi 6 into the 10th Gen Core processors, which is a pretty big deal for those who care about connectivity. Wi-Fi 6, formerly known as 802.11AX, is the future of Wi-Fi and will bring significant improvements to the quality of service, performance, and efficiency. Intel and others are doing the industry a favor by aggressively pushing the standard. Integrating Wi-Fi 6 will help to increase the adoption of Wi-Fi 6 and improve the user experience of PC users. The more users with Wi-Fi 6 devices on a Wi-Fi 6 network, the more efficient the network becomes. Everyone’s speeds (including non-Wi-Fi 6 users) go up. There are also coverage and quality benefits to Wi-Fi 6, but those are more dependent on the access point. Thunderbolt 3’s integration is also important because it is an incredibly versatile high-bandwidth interface that helps improve a device’s modularity with things like docks, displays, and drives.
  • OEMs will launch systems with the 10th Gen Core processors this holiday season, which is a bit later than one would expect with a May announcement. With the new process node and design principals, the 10th Gen Core processors are poised to usher the company into a new era.


(Bloomberg) Duke Energy Gets Nod From Indiana Regulator for Solar Pilot

  • Duke Energy received approval from the Indiana Utility Regulatory Commission for a pilot program that allows some customers lease solar energy facility from Duke for up to 20 years.
    • Initial capacity limited to total of 10 megawatts for customers
    • Duke installs, operates, owns and maintains facility
    • Customers receive all of the kilowatt-hour output of solar energy equipment through net-metering arrangement
21 Feb 2018




21 Feb 2018


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21 Feb 2018



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