Corporate debt sales come off second busiest week on record
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose on Monday, pushing yields down for the first day in four, as Asian and European markets react to Greece’s debt deal and the U.S. payrolls report from last week.
The main event coming up for the bond market is the government’s sale of 3-year notes.
Yields on 10-year notes 10_YEAR -1.38% , which move inversely to prices, fell 4 basis points to 1.99%. A basis point is one-hundredth of a percentage point.
Yields on 30-year notes 30_YEAR -1.13% declined 4 basis points to 3.14%, after last week touching their highest level in more than two weeks.
Yields on 5-year notes 5_YEAR -2.22% fell 3 basis points to 0.88%, coming off their highest level since late December.
“The market is a bit firmer overnight on a post-Greek exchange yawn from the markets and some softer [overseas] data,” said bond strategists at CRT Capital Group.
U.S. stock futures point to a slightly lower open on Wall Street, as major European equity indexes edged lower. Read about European stocks.
CRT strategists also noted that bond trading volume is about half of its normal level.
While there’s no major U.S. economic data on the schedule for Monday, this week brings retail sales and inflation numbers. Also, the Federal Reserve meets on Tuesday but isn’t expected to make any major changes in interest rates or the outlook for them or in the central bank’s bond-buying program, sometimes called quantitative easing.
“The Fed is like the rest of us, trying to grasp whether the greenshoots can and will be sustained and so won’t offer up more encouragement on QE3 this week,” CRT’s David Ader and Ian Lyngen wrote in a note.
Debt sales
Besides the Treasury’s Department’s auction of 3-year notes 3_YEAR -1.11% at 1 p.m. Eastern time, analysts will be looking to whether companies continue to issue debt at the torrid pace seen last week.
Companies sold $51.6 billion in debt last week, making it the busiest issuance week of the year, according to Informa Global Markets. It’s also the second busiest week on record.
“Low Treasury yields and a significant tightening in credit spreads ... have delivered record-low borrowing rates for corporations who are issuing aggressively, not knowing how banks’ appetite for lending will turn out in a year driven by overseas events and tight regulation,” said Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities.
“This issuance is drawing cash from Treasurys and coincided with the latest jump in Treasury yields into the employment number. Read more on growth in U.S. payrolls for February.
“We expect strong issuance to continue, but the impact on Treasury yields will be mitigated by the constant pull of the Fed on long-term rates” as long as its program of bond purchases continues in some form, he said.
