Archive for July, 2015

Energy Defaults Weigh on Junk

Friday, July 31st, 2015

Via Barron's: 3-Year High in Junk Bond Defaults in Second Quarter   By Amey Stone The number of defaults among companies rated below investment grade jumped to 15 in the second quarter, a three-year high, according to Moody’s Investors Service. There were just 10 in the first quarter of 2015 as well as in ...

Equity Market Leverage

Friday, July 31st, 2015

The FT has an excellent piece on leverage in the equity market. The author note that at current levels it approaches levels attained in 2000 and 2007 before markets began to decline. If you are sanguine on stocks this article should make you cautious. Via the FT: The Chinese stock markets have ...

Eclectic Stuff

Friday, July 31st, 2015

Via Merrill Lynch Research: Full on bonds. Not surprisingly after another record breaking month in the primary market (July=$129bn) the high grade bond market feels satiated with paper. We see this as secondary credit spreads continue to widen, new issue concessions increase, although there was some month-end buying in July it ...

Weekend Data Preview

Friday, July 31st, 2015

Via Robert Sinche at Amherst Pierpont Securities: AUSTRALIA: Manufacturing PMI index for July, following sub-50 readings in 17 of the last 20 months, with a particularly low June reading at 44.2. CHINA: The “official” Manufacturing and Non-Manufacturing PMIs will be released FRIDAY EVENING at 9:00pm , with the BBerg consensus at 50.1 ...

Bullard OK With September Rate Hike

Friday, July 31st, 2015

Via Bloomberg: Fed’s Bullard: ‘We Are in Good Shape’ to Raise Rates in Sept:WSJ 2015-07-31 18:19:32.99 GMT By Libby Sallaberry McGowan (Bloomberg) -- Fed’s Bullard tells Wall Street Journal in interview GDP data supports case to boost rates soon, cleared away worries over outlook. * “The outlook remains fairly good for the economy” * Fed policy outlook remains ...

Guest Post on the Month End Trade

Friday, July 31st, 2015

Via Steve Liddy and I apologize for the charts being difficult to read: I’ve pointed this chart out the last couple of months. Month end has provided a great opportunity to get short. Over the previous 6 month ends, LB yields have risen an average of 36+bp, before seeing any significant ...

Deeper Dive into the ECI

Friday, July 31st, 2015

This is a second piece from TDSecurities by Millan Mulraine. He conversed with the BLS and he thinks the softness is a result of one off type items and he suggests fading the strength derived from the data surprise. Via Millan Mulraine at TDSecurities: In addition to the earlier note sent out ...

Another Take on ECI

Friday, July 31st, 2015

This one is by Eric Green at TDSecurities. He is also a bit flummoxed but does not think that this will dissuade the FOMC from hiking rates in September. Via Eric Green at TDSecurities: The Q2 ECI was dismal. Total compensation rose only 0.2%, well below the expected gain of 0.6%, and ...

Regarding the Soft ECI

Friday, July 31st, 2015

Stephen Stanley is Biblical in his disbelief of the BLS data. He writes an interesting piece on the ECI report this morning. Via Stephen Stanley at Amherst Pierpont Securities: The ECI was stunningly soft in Q2, rising by only 0.2%, the lowest reading in the roughly 20-year history of the series.  Wages ...

What to Watch Today

Friday, July 31st, 2015

Via Bloomberg: WHAT TO WATCH: * (All times New York) * Economic Data * 8:30am: Employment Cost Index, 2Q, est. 0.6% (prior 0.7%) * 9:00am: ISM Milwaukee, July, est. 50 (prior 46.55) * 9:45am: Chicago Purchasing Manager, July, est. 50.8 (prior 49.4) * 10:00am: U. of Mich. Sentiment, July F, est. 94 (prior 93.3) * U. of Mich. Current Conditions, July ...