USD Swaps: Hawkish blemishes fade; 20y strong

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The modest selloff this morning faded as USTs rebounded to unchanged while the curve flattened further - on the heels of a strong 20y auction.

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  • Hawkish blemishes fade; 20y strong

  • New issues


    Hawkish blemishes fade; 20y strong

    This afternoon, Treasuries swept away the initial selloff seen post-Powell testimony to the House, with yields returning near unchanged after seeing an up to 7bps rise in yields earlier. Powell’s remarks were roughly in line with previous comments and the lack of a definitive shift in tone led to a muted reaction in USTs. The 10y note yield is last 0.4bp higher in yield at 3.723% while 2s10s is 2.2bps lower at -99.25bps while 5s30s dipped  lower by 0.6bps to -14.8bps. Equities ended lower across the board (DJIA -0.3%, S&P -0.4% and Nasdaq -1.2%).  


    This afternoon, Atlanta Fed President Bostic (alternate voter) stated his baseline was a rates on hold view to the end of the year as he felt that it was “still early in the game” to see the full impact of the hikes.


    Meanwhile, the long end received an additional boost this afternoon as the $12bn 20y auction was strong, coming 2bps through the 1pm bid side, drawing a rate of 4.01%. The bid-to-cover of 2.87x is a record high while indirects jumps higher (74.6%) and directs faltered slightly (17.6%) and left primary dealers with the second lowest allocation of 7.8%.  


    Swap spreads saw low volumes today, with spreads narrowing in modestly intraday. IG new issuance saw just over $4bn price along with SSA EDC’s $2bn 3y global this morning. The week total is now $10.15bn, still under the $15bn or so expected, but with Nasdaq’s M&A multi-tranche due to arrive this week, the forecast looks good to achieve or exceed the forecast, sources judge.


    2s -10bps (-1.25bps), 3s -12bps (unch), 5s -21.5bps (-0.375bps), 7s -28.25bps (-0.5bps), 10s -26.625bps (-0.375bps), 20s -63.125bps (-0.25bps), 30s -65.625bps (unch).




    New issues  


    • Korea Gas plans a USD 3y or 5y bond after meeting investors from June 23. Leads are BNPP, HSBC, JPM, Mizuho, Korea Development Bank and UBS.


    • Brazil’s Cosan is preparing a USD 7y. Leads are Bradesco, BTG, Citi, ITABBA, JPM, MS, Santander and UBS.


    • NongHyup Bank plans a 5y USD Social bond via BNPP, BofA, Credit Agricole, MUFG, SocGen and UBS.


    • Tidewater is preparing a $250m 5y through DNB, Clarksons and Fearnley.


    • Nasdaq plans USD 4y to 40y bonds (and a EUR long 8y) to fund its acquisition of Adenza. Leads are BofA, Citi, GS, JPM, MS, Nordea and SEB.


    • Bank of Montreal priced a $1bn 5y Covered bond at swaps +92bps. Leads are BMO (B&D), HSBC, Lloyds, RBC, Scotia and UBS.


    • Principal Life Global Funding priced a $300m FA-backed deal via Barclays, BN PP, DB and MS. +155bps.  


    • Element Fleet priced a $750m 3y benchmark via BofA, BMO and CIBC.  BBB/BBB+.  +200bps.


    • Hyundai Capital America priced a $3bn 4-part ($750m 2y Green, $750m 3y, $1bn 5y and $500m 7y). Treasuries +115bps, 145bps, +178bps and +188bps. Leads are Citi (B&D), CA, HSBC, Mizuho, SocGen and SMBC Nikko.  Baa1/BBB+


    • EDC priced a $2bn 3y Global at swaps +25bps. Leads are BofA, Citi, CA, Daiwa and Scotia.