USD Swaps: USTs climb back higher into ME; IG tops $30bn for week
USTs climb back higher into ME; IG tops $30bn for week
Month end buying appeared to take over the price action in USTs this afternoon, with Treasuries pulling back higher, led by the back end of the curve. It was an about-face from the morning’s European-inflation related selloff, with the 10y note yield now back at 3.926% after having poked up to 3.98% earlier in the day. 2s10s is last 2bps lower at -89bps while 5s30s has flattened 1.5bp to -25.6bps. Equities fell back lower into the close (DJIA -0.71%, S&P -0.1% and Nasdaq -0.1%). .5
From the price action today, inflation readings continue to have the focus and attention of the market, a source noted, and today’s higher European inflation readings was enough to move UST yields to probe the upper end of the range.
The swap spread curve saw minor moves today, with belly and longer end spreads moving off the intraday highs this afternoon, while front end spreads rebounded a touch wider amid mostly lower volumes.
Meanwhile, IG new issuance supply ended the month of February with a bang, as another $11.35bn priced today, bringing the two day total this week to over $30bn. February closed with $150.9bn, well over the $100bn expected for the month.
As for the Fed’s dot plot outlook, while analysts at Barclays consider that payrolls on March 10, and the February CPI released on March 14 “will color the March FOMC decision,” Barclays believes that “in light of the data released since the February 1 FOMC meeting, we expect several FOMC participants to revise their 2023 dot from 5.1% to 5.4%” in the March SEP. Thus, this would bring the 2023 median dot in line with Barclays’ rate call “that indicates a peak funds rate of 5.4% this year.”
Currently, SOFR swaps 2s 10.625bps (-0.75bps), 3s -5.125bps (+0.125bps), 5s -18.75bps (+0.25bps), 7s -29.25bps (unch), 10s -27bps (unch), 20s -60.75bps (+0.25bps), 30s -68.125bps (-0.25bps).
- SMFG launched a $1.3bn self-led 4-part ($300m 3y tap of its 5.464% Jan 2026, $400m 5y tap of its 5.52% Jan 2028, $350m 7y tap of its 5.71% Jan 2030 and $250m 10y tap of its 5.766% Jan 2033). A1/A-. +105bps. +140bps, +155bps and +170bps.
- Astrazeneca Finance launched a $2.25bn 3-part ($1.1bn 5y, $650m 7y and $500m 10y). Leads BofA, HSBC, MIZ and Santander. A3/A. +75bps, +90bps and +100bps.
- Cigna Group priced a $1.5bn 2-part ($700k 3y NC1 and $800k 10y). Leads BofA, MS and USB. Baa1/A-/BBB+. +117bps, +150bps.
- America Tower priced a $1.5bn 2-part ($700m 5y and $800m 10y). Leads Barclays, MIZ, RBC, Scotia and TD. +140bps, +180bps.
- Florida Power & Light priced a $2.5bn 3-part ($1bn 5y, $750m 10y and $750m 30y FMB benchmarks). Leads KeyBank, BNPP, Citi, CA-CIB, GS and MIZ. Aa2/A+/AA-. +90bps, +120bps and +140bps.
- Citigroup priced a$1.25bn self-led PerpNC5. Ba1/BB+/BBB-. 7.375%.
- Equitable Financial priced a $300m 5y FA-backed deal via DB, JPM and PNC. A1/A+. +130bps.
- HSBC priced a $2bn self-led PerpNC5.5 Sub AT1 note. A3/A-/A+. Launched at 8%.
- Bank of England priced a $2bn 3y. Leads BofA, DB, RBCCM and TD. Aa3/AA/AA-. +13bps.