February 22nd, 2021 6:33 pm

four score and seven years ago our forefathers

Foreign Flows into US Credit Product

May 16th, 2021 2:45 pm

Weekly Foreign Flows to Long-Dated U.S. Credit Surge: Barclays
2021-05-14 13:33:59.208 GMT

By Jack Pitcher
(Bloomberg) — Foreign flows into longer-dated U.S. credit
this week were the highest of the year, potentially due to
expectations that hedge-adjusted yields will increase, according
to Barclays strategists.
* Foreign flows, measured by net dealer-to-affiliate volume,
into the 7-12 year and 12 year+ buckets, are by far the highest
weekly total of the year, Barclays strategists Bradley Rogoff
and Shobhit Gupta wrote in a note Friday
** Those flows are over $2.3 billion for the week as of Friday
morning: Gupta said in separate communication
* A pickup in inflation “should generally drive a steepening in
Treasury curves,” the strategists wrote
** “This should be supportive of overall demand for credit,
especially from overseas buyers as hedge-adjusted yields
* The flows “should be positive for long-dated debt valuations,
especially BBB credits”

DeutscheBank to Change Way It Covers Fixed Income Clients

May 12th, 2021 3:17 pm

Deutsche Bank Overhauls Fixed Income Sales in Ongoing Cost Drive
2021-05-12 16:14:57.403 GMT

By William Shaw and Steven Arons
(Bloomberg) — Deutsche Bank AG is rearranging how it sells
fixed-income trading products as it seeks to lower costs while
avoiding falling revenue at the company’s biggest source of
The new model will divide the coverage team into two
groups, one focusing on flow and liquidity and another on client
solutions. That’s in an effort to provide purely electronic
offerings to one set of clients, and more advanced — and more
expensive ones — to another.
The bank will pilot the new structure among its team for
European rates and credit flow products in an effort to
“dynamically manage the firm’s client perimeter,” according to a
press release on Wednesday. Around 80 staff will be affected,
the unit’s managing director, Mark Tiernan, said in an
Though the aim of the project is to “reduce the cost of
trading,” the lender isn’t currently planning any job cuts as a
result of it, Tiernan said.
Deutsche Bank under Chief Executive Officer Christian
Sewing has been beefing up its credit business as it seeks to
benefit from a global trading boom that has led to soaring
revenue in its securities unit. Income from buying and selling
debt securities rose 34% in the first three months of the year,
compared with an average 17% gain for the largest U.S.
investment banks, and credit trading performed particularly
But the fixed-income trading unit headed by Ram Nayak is
also under pressure to keep contributing to Deutsche Bank’s
cost-cutting effort. Most of the future savings are to come from
lower back-office costs by de-commissioning IT and replacing
manual work with machines after an aggressive headcount
reduction through the previous two years.
The lender’s investment bank, of which fixed-income and
currency trading is the biggest part by far, has vowed to keep
revenues stable this year while cutting expenses by almost 10%
by the end of 2022.

Amazon Deal With All Tranches and Pricing

May 10th, 2021 7:18 pm

BFW 05/10 17:11 GUIDANCE: Amazon $Benchmark Debt Offering in 8 Parts
BFW 05/10 12:14 NEW DEAL: Amazon $Benchmark Debt Offering in 8 Parts (1)
BFW 05/10 12:03 NEW DEAL: Amazon $Benchmark Debt Offering in 8 Parts

LAUNCH: Amazon $18.5b Debt Offering in 8 Parts
2021-05-10 18:42:50.919 GMT

By Michael Gambale and Bloomberg Automation
(Bloomberg) — Deal launched.
* $1b 2Y Fixed (May 12, 2023) at +10
** Guidance +15a (+/-5), IPT +30 area
** MWC
** See security information: 2Y Fixed
* $2.5b 3Y Fixed (May 12, 2024) at +20
** Guidance +25a (+/-5), IPT +45 area
** MWC
** See security information: 3Y Fixed
* $2.75b 5Y Fixed (May 12, 2026) at +30
** Guidance +35a (+/-5), IPT +55 area
** 1-month par call, MWC
** See security information: 5Y Fixed
* $2.25b 7Y Fixed (May 12, 2028) at +40
** Guidance +45a (+/-5), IPT +65 area
** 2-month par call, MWC
** See security information: 7Y Fixed
* $3b 10Y Fixed (May 12, 2031) at +50
** Guidance +55a (+/-5), IPT +75 area
** 3-month par call, MWC
** See security information: 10Y Fixed
* $2b 20Y Fixed (May 12, 2041) at +70
** Guidance +75a (+/-5), IPT +90 area
** 6-month par call, MWC
** See security information: 20Y Fixed
* $3.25b 30Y Fixed (May 12, 2051) at +80
** Guidance +85a (+/-5), IPT +100 area
** 6-month par call, MWC
** See security information: 30Y Fixed
* $1.75b 40Y Fixed (May 12, 2061) at +95
** Guidance +100a (+/-5), IPT +115 area
** 6-month par call, MWC
** See security information: 40Y Fixed

* Issuer: Amazon.com Inc (AMZN)
* Exp. Ratings: A1/AA-
* Format: SEC registered, senior unsecured
* Settlement: May 12, 2021 (T+2)
* Denoms: 2k x 1k
* Bookrunners: Citi, JPM (B&D), MS, WFC
* JPM is Sustainability Structuring Agent
* 2Y tranche is sustainability bond
* UOP: General corporate purposes, which may include, but are
not limited to, repayment of debt, repurchases of outstanding
shares of common stock, acquisitions, investments, working
capital, investments in our subsidiaries, and capital
** Sustainability tranche: To finance or refinance, in whole or
in part, green or social Eligible Projects, as defined in the
preliminary prospectus supplement
* Information from person familiar with the matter, who asked
not to be identified because they’re not authorized to speak
about it

See Bloomberg Intelligence Primer
See issuer debt profile: DDIS <GO>

To contact the reporter on this story:
Michael Gambale in New York at [email protected]

To view this story in Bloomberg click here:

Long Time Bond Bull Still Bullish

April 10th, 2021 8:49 pm

Hoisington Says Bonds Will Soon Escape ‘Inflationary Psychosis’
2021-04-09 19:18:37.433 GMT

By Elizabeth Stanton
(Bloomberg) — Inflation fears, a key driver of the
Treasury market’s biggest quarterly loss in decades, are a
“psychosis” that will fade away over the course of the year,
Hoisington Investment Management Co. said in its latest
quarterly report.
“Contrary to the conventional wisdom, disinflation is more
likely than accelerating inflation,” the report said. After
moving higher during the second quarter, the annual inflation
rate “will moderate lower by year end and will undershoot the
Fed Reserve’s target of 2%,” and “the inflationary psychosis
that has gripped the bond market will fade away.”
Hoisington, whose leadership includes founder Van
Hoisington and chief economist Lacy Hunt, manages about $5
billion in Treasuries. The firm’s Wasatch-Hoisington Treasury
Fund returned 20% last year, more than any other actively
managed U.S. government bond fund, according to Bloomberg data.
It’s had an annual average return of about 7.5% since its 1986
While U.S. GDP is likely to grow in 2021 at the fastest
pace since 1984 and possibly since 1950, several factors will
restrain inflation, Hoisington said. They include:
* Inflation is a lagging indicator, reaching lows an average of
15 quarters after recessions end
* Productivity tends to rebound vigorously after recessions
* Supply-chain restoration will be disinflationary
* Pandemic has accelerated technological advancements
* Growth numbers don’t reflect reflect the costs of rampant
business failures

As inflation “is the key determinant for the level and
direction of long term Treasury yields,” yields also tend to
reach cyclical lows long after the start of recessions, with an
average lag of 76 months since 1990, Hoisington said. “While no
two cycles are ever alike, the trend in long bond yields remains

To contact the reporter on this story:
Elizabeth Stanton in New York at [email protected]
To contact the editors responsible for this story:
Benjamin Purvis at [email protected]
Debarati Roy, John McCorry

Huge Short in TLT

April 6th, 2021 1:04 pm

Short Bets in $14 Billion Treasury ETF Say Yield Calm Will Break
2021-04-06 16:17:24.422 GMT

By Katie Greifeld
(Bloomberg) — As Treasury yields stall near their
prepandemic highs, investors are wagering that the tranquility
will be short-lived.
Short interest in the $14 billion iShares 20+ Year Treasury
Bond exchange-traded fund (ticker TLT) has climbed to about one-
fifth of the shares outstanding, the highest since early 2017,
according to data from IHS Markit Ltd. Bearish bets have risen
from 7% at the start of 2021 amid the fund’s 13% year-to-date
While the bond selloff that’s hammered TLT appears to have
leveled off with 30-year yields hovering near 2.4% for the
better part of a month, the surge in short bets suggests
investors don’t expect the calm to last long. Though yields have
already moved “significantly” after the market aggressively
repriced a brighter growth outlook, turbulence is likely to
return as economic data is released over the next few months,
according to Principal Global Investors.
“This period of calm is likely short-lived,” said Seema
Shah, the firm’s chief strategist. “We expect investors to
grapple with the higher inflation and growth environment
repeatedly through 2021. Each piece of strong economic and
inflation data will unnerve investors again, driving volatility
Investors have pulled almost $2.6 billion from TLT so far
in 2021, putting the fund on track for the worst year of
outflows since its inception in 2002. Upgraded growth forecasts
and climbing inflation expectations have dragged down long-
duration funds such as TLT and the $40 billion iShares iBoxx $
Investment Grade Corporate Bond ETF (ticker LQD), which posted
its biggest one-day outflow on record last week.
The ICE BofA MOVE Index, a gauge of U.S. bond volatility,
has eased to roughly 62 from a peak of 76 reached in late
February, the highest level in 11 months. While the bond market
is in a “holding pattern” after positioning for much more robust
economic growth, the next catalyst will come from whether or not
the data ultimately deliver, according to Richard Bernstein
Advisors LLC.
“Treasuries have largely priced the current Covid stimulus,
the promise for infrastructure, and an economic recovery,” said
Michael Contopoulos, the firm’s director of fixed income and
portfolio manager. “The next leg will be determined by hard data
— actual increases in inflation, more than just promise for
better days. Over the course of the year and in 2022, we should
expect more volatility and trending higher rates.”

–With assistance from Olivia Raimonde.

February 22nd, 2021 11:42 am


Corporate ETFs and Risk Appetite

January 24th, 2018 7:14 am

Via Bloomberg :

Bond ETFs Awash in Pain May Be Red Flag for Risk Appetite (1)
2018-01-22 14:56:05.415 GMT

By Dani Burger and Sid Verma
(Bloomberg) — U.S. corporate debt exchange-traded funds
have bled a near-historic sum of assets over the past two weeks,
but holders of the underlying securities are paying little heed.
The bonds themselves are enjoying some of the tightest
spreads on record as appetite for new issues remains strong. On
one hand, tax reform, rising oil and global growth may be
fueling demand for yield. Yet the ETFs — in the midst of the
longest outflow streak in at least seven years — point to a
The divergence is stumping Wall Street strategists who use
the ETF market not only as a proxy for investor sentiment in
debt, but also as a gauge of risk appetite for equities and
other assets. Though technical quirks associated with ETF
trading may have caused the dislocation, some analysts point to
a simpler distinction: so-called dumb money versus smart.
“The tax package is probably giving institutional investors
more confidence about the shape of corporate balance sheets,”
said Matt Maley, a strategist at trading firm Miller Tabak + Co.
“Thus they might be making up for the selling that is coming
from these products geared towards individuals, who are worried
about the rise in government yields.”
U.S.-listed corporate bond ETFs are headed for a second
consecutive month of outflows, the first time that’s occurred in
at least seven years. The pain is across ratings. The iShares
iBoxx Investment Grade Corporate Bond ETF, LQD, had the biggest
day of losses last week since 2016, while BlackRock’s high-yield
equivalent, HYG, is in the midst of its biggest two-month
outflows on record.
If the withdrawals are a symptom that retail funds are
losing their taste for fixed-income, the impact could be far-
reaching. A tweet from DoubleLine Capital LP co-founder Jeffrey
Gundlach Thursday — who has previously warned underperformance
may portend a selloff for risk assets — noted the gap between
junk ETF prices and stock gains.
Strategists at JPMorgan Chase & Co. expect individual
investors to be the “wildcard” for bond markets grappling with
diminished central-bank stimulus, while dollar weakness may
curtail foreign inflows to U.S. corporate bonds.
Spreads in junk and investment-grade bonds sit near the
tightest since 2007 even after high-yields premiums rose
slightly. Meanwhile, investors pulled more than $1.9 billion
from U.S.-listed corporate bond ETFs in the week to Jan. 19, the
second consecutive five-day period of outflows.
ETF constituents can differ from benchmarks due to
liquidity and other portfolio constraints, so some technical
factors may be at play. LQD, for example, has greater
sensitivity to interest-rate risk, with a modified duration of
8.7 years, compared with 7.6 years for the broader Bloomberg
Barclays U.S. Investment Grade index.
“It looks like constituents — either maturity, credit or
liquidity differences between the two markets — have played a
role, but there does seem to be a general weakening of ETFs
relative to the market,” said Thomas Tzitzouris, fixed-income
research chief at Strategas Research Partners. “At a high level,
we believe that high-yield is running into resistance.”
What’s more, ETFs typically serve as “placeholder” vehicles
in lieu of strategic allocations. Investors, therefore, may be
putting cash into work in the primary market during the January
deluge at the expense of passive instruments.
It’s much faster to make a short, or bearish, bet on an ETF
than through cash bonds, according to Andrew Brenner, the head
of international fixed-income at Natalliance Securities in New
York. Later when traders cover those shorts the ETFs recover, he
“The actual bonds could take a week to move while the ETF
takes 10 minutes,” he said. “But we have seen this before and
the market has held, and then shorts have to grab the ETF so it
In the short-term, the swelling gap between ETFs and the
underlying market may expose some investors to basis risk, or
the peril of hedging bond exposures through passive investments.
“At the very least ‘credit hedge’ products are
underperforming,” Peter Tchir, the head of macro strategy at
Academy Securities Inc., wrote in a note Friday.  “Whether a
precursor to wider weakness or setting the stage for one gap
tighter back to levels closer to pre-crisis levels is the big
question. With the year off to such a great start, I would err
to the side of caution here. ”

To contact the reporters on this story:
Dani Burger in London at [email protected];
Sid Verma in London at [email protected]
To contact the editors responsible for this story:
Samuel Potter at [email protected]
Cecile Gutscher, Natasha Doff

Margin Debt

December 28th, 2017 12:41 pm

Via Bloomberg;

Margin Debt Ratio at NYSE Rises To Most Speculative Since 2003
2017-12-28 14:07:01.421 GMT

By Bloomberg Automation
(Bloomberg) — Net debt in New York Stock Exchange customer
margin accounts rose to 1.03 percent of companies’ market
capitalization in November, the most in data going back to 2003
and a signal that traders became more speculative.
* Net margin debt, or debits in the accounts minus cash,
increased to $286.9 billion in November from $269.7 billion in
the prior month.
* October’s total represented 0.99 percent of the companies’
market cap.
* The margin ratio was 0.8 percent in November a year earlier.
* Leverage tends to rise and fall with the market’s value.
Margin borrowing exceeding cash indicates more speculation,
while cash greater than debt suggests greater investor caution.
The last time the accounts held more cash than debt was in
December 2011.

| November | October
Margin account debts|$580.9 B |$561.4 B
Cash account credits|$140.9 B |$140.0 B
Margin account | |
credits |$153.2 B |$151.7 B
Net margin debt |$286.9 B |$269.7 B
NYSE Market Cap |$27.8 T |$27.2 T
Net margin debt to | |
market cap ratio | 1.03%| 0.99%
The NYSE releases margin balances as of the end of the
month. Bloomberg’s market cap ratio is calculated as of that

Nary a Whiff of Inflation Here

October 14th, 2017 11:07 am

Via Bloomberg:

Cleveland Fed Oct. 10Y Inflation Expectations Rose to 1.89%
2017-10-13 18:11:10.646 GMT

By Alex Tanzi
(Bloomberg) — Suggests inflation expectations of less than
2% on average over the next decade, according to the Cleveland
* One year inflation expectation at 1.95% v 1.74% a year ago
* 5Y inflation expectation at 1.81% v 1.59% a year ago
* 10Y inflation expectation at 1.89% v 1.70% a year ago
* 20Y inflation expectation at 2.07% v 1.93% a year ago
* 30Y inflation expectation at 2.20% v 2.09% a year ago
* The Federal Reserve Bank of Cleveland’s inflation expectations
model uses Treasury yields, inflation data, inflation swaps, and
survey-based measures of inflation expectations to calculate the
expected inflation rate (CPI) over the next 30 years.

To contact the reporter on this story:
Alex Tanzi in Washington at [email protected]

To contact the editors responsible for this story:
Alex Tanzi at [email protected]
Kristy Scheuble