Latest news with #CreditSights
Yahoo
13-07-2025
- Business
- Yahoo
Bond Traders Cast Doubt on September Fed Cut Before Key CPI Data
(Bloomberg) -- For much of this year, bond investors were all but certain that the Federal Reserve would resume cutting interest rates by September. Singer Akon's Failed Futuristic City in Senegal Ends Up a $1 Billion Resort Why Did Cars Get So Hard to See Out Of? How German Cities Are Rethinking Women's Safety — With Taxis Philadelphia Reaches Pact With Workers to End Garbage Strike Lately, that confidence has been wavering. And those nascent doubts add to the focus on inflation data this week that will help set expectations for the Fed's next steps. It will also dictate whether Treasuries can extend their solid first-half performance, which was the best in five years even after stretches of dizzying swings. The CPI figures 'could set the tone for the direction of the Fed and risk sentiment for the second half of the year,' said Zachary Griffiths, head of investment-grade and macroeconomic strategy at CreditSights. A batch of strong jobs figures in early July led traders to rule out a rate cut at the Fed's gathering this month. They also now see about a 70% chance that officials ease at the central bank's September meeting, whereas a reduction by then was viewed as a lock as recently as late June. That backdrop raises the stakes for Tuesday's release of the June consumer price index, which according to Barclays Plc strategists has averaged the biggest absolute surprise of any month in recent years. Signs that price pressures are building amid President Donald Trump's tariff rollout would risk raising further questions around a September cut, and may buoy those positioning for higher yields. Conversely, a tame report could re-energize wagers on near-term monetary easing. 'We should be able to see the effect of the tariff war' in the coming inflation reports, said Tracy Chen, a portfolio manager at Brandywine Global Investment Management. 'I don't see how the Fed can cut in September. The resilience of the job market and the frothy risk asset market do not justify the cut.' Her view is that the yield curve is likely to steepen, given longer maturities' vulnerability to a pickup in inflation, the prospects of government spending and changes in foreign demand. Tariff Divide The Fed will get two further CPI releases before its September decision. Chair Jerome Powell has said that officials need more time to gauge the impact of tariffs before cutting rates, signaling patience in the face of Trump's relentless pressure on him to lower borrowing costs. The levies have driven an emerging divide among policymakers, and getting clarity around the issue has become even tougher after the president delayed the deadline for punitive tariffs on trading partners until Aug. 1. The upshot is that traders have little conviction about where the world's biggest bond market goes next, leading them to unwind big bullish bets over the past week. That sense of limbo leaves yields range-bound for now, with rates on two-year notes, the maturity most sensitive to Fed expectations, fluctuating between roughly 3.7% and 4% as they have since early May. A measure of expected volatility in Treasuries, meanwhile, has tumbled from its tariff-fueled April heights to the lowest in more than three years. Economists surveyed by Bloomberg expect the CPI report to show annual core inflation accelerated to 2.9% in June, the highest since February. What Bloomberg strategists say... 'Treasury yields are at the midpoint of the 2025 range' ahead of this week's inflation and consumer data. 'Anticipation of those data sets is likely to keep bond rates traversing a familiar range with dips being bought and rallies sold for now.' — Alyce Andres, FX/Rates strategist, Markets Live For the full analysis, click here. Those worried about an extended Treasuries slump on hot inflation data may take solace from last week's 10- and 30-year auctions, which showed solid demand, suggesting buyers may step in and limit any selloff. Since easing in December, policymakers have held borrowing costs steady. Powell has called the current level of rates 'modestly restrictive,' and the median forecast in the Fed's so-called dot plot unveiled last month was for two cuts by year-end. However, seven officials saw no reductions in 2025, while 10 saw two or more. Fed Governors Christopher Waller and Michelle Bowman have signaled a desire to resume cutting as soon as this month. 'We remain concerned clearer signs of tariff pressure on consumer prices will emerge, forcing a repricing of the path of Fed policy in the near-term, pushing Treasury yields higher across the curve in a modest bear-flattener,' said Griffiths at CreditSights. Even if the next cut comes after September, it doesn't necessarily derail the path of easing, said John Lloyd, global head of multi-sector credit at Janus Henderson. That notion may also curb any bond declines, he said. 'We have two cuts priced in through December,' he said. 'Could one of those come out? Yes, but it probably just gets moved into the first quarter of next year.' What to Watch Economic data: July 15: Empire manufacturing; consumer price index, real average hourly earnings July 16: MBA mortgage applications; producer price index; New York Fed services business activity; industrial production; manufacturing (SIC) production; capacity utilization; Fed Beige Book July 17: Retail sales; import/export price indexes; initial jobless claims; Philadelphia Fed business outlook; business inventories; NAHB housing price index; net long-term TIC flows July 18: Housing starts; building permits; University of Michigan sentiment and inflation expectations Fed calendar: July 15: Vice Chair for Supervision Michelle Bowman; Governor Michael Barr; Richmond Fed President Tom Barkin; Boston Fed President Susan Collins; Dallas Fed President Lorie Logan July 16: Barkin; Cleveland Fed President Beth Hammack; Barr; New York Fed President John Williams July 17: Governor Adriana Kugler; San Francisco Fed President Mary Daly; Governor Lisa Cook; Governor Christopher Waller Auction calendar: July 14: 13-, 26-week bills July 15: 6-week bills July 16: 17-week bills July 17: 4-, 8-week bills 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions Trump's Cuts Are Making Federal Data Disappear Soccer Players Are Being Seriously Overworked Trade War? No Problem—If You Run a Trade School Will Trade War Make South India the Next Manufacturing Hub? ©2025 Bloomberg L.P.
Bloomberg
10-06-2025
- Business
- Bloomberg
Warner Bros. Split Leaves Bondholders With Painful Choices
Just three years after selling one of the biggest high-grade corporate bonds on record, Warner Bros. Discovery Inc. is giving noteholders the type of tough choices more typically faced by holders of stressed junk bonds. The company is buying back about 40% of its roughly $36 billion of bonds as part of its splitting into two companies, refinancing the debt using a $17.5 billion bridge loan from JPMorgan Chase & Co. But whether investors choose to sell back their debt or not, many face risks they previously didn't, according to strategists at Barclays Plc and research firm CreditSights.
Reuters
09-06-2025
- Business
- Reuters
Looming US Treasury debt auctions an important sentiment test
NEW YORK, June 9 (Reuters) - U.S. Treasury auctions of notes and bonds this week are even more in focus than usual as tests of market sentiment on U.S. assets, and while investors look like keen buyers of short and medium-term debt, appetite at the long end is more dicey. These once-routine auctions have become a focus for investors as a gauge of demand, both foreign and domestic, with the July 9 deadline for the 90-day pause on reciprocal tariffs fast approaching. Aside from bills, the U.S. Treasury will sell a total of $119 billion in three- and 10-year notes, as well as 30-year bonds. The latter will be closely watched for signs that bond investors are putting their foot down and rejecting countries with huge fiscal deficits and mountains of debt. "We are now in an environment where investors are looking that could be dropping at a time when supply seems to be on the precipice of rising further," said Zachary Griffiths, head of investment grade and macro strategy at CreditSights in Charlotte. Bond vigilantes, seemingly back with a vengeance, have questioned fiscal profligacy around the world amid concerns U.S. President Donald Trump's trade war and tax cuts will fuel inflation, while the tariffs will additionally curb global growth and force governments to spend more. At the same time, last month's U.S. credit rating downgrade by Moody's is a stark reminder that the world's largest economy is courting disaster with a $36 trillion debt pile. On Tuesday, the Treasury will sell $58 billion in three-year notes, followed by $39 billion in 10-year debt on Wednesday, and $22 billion in 30-year bonds on Thursday. Overall, analysts expect these auctions to go smoothly. "The trend in these auctions has been reassuring so far," said Guneet Dhingra, head of U.S. rates strategy at BNP Paribas, in New York. "Largely the auction numbers suggest that there has been no meaningful dent in both foreign and domestic demand." Last month's three-year note auction showed solid results. Indirect bids, which include foreign central banks, took in 62% of the total issuance, lower than April's numbers, but roughly in line with the average for the last 12 auctions. Offshore investors, particularly foreign official buyers, typically gravitate toward shorter-term Treasuries, specifically those with maturities of less than five years, according to the latest U.S. Treasury survey. Jay Barry, head of global rates strategy at J.P. Morgan, wrote in a research note that foreign official institutions' focus on the front end suggested that any rotation away from Treasuries "could be realized through letting holdings run off and not reinvesting, rather than selling securities outright." In the case of the 10-year note auction on Wednesday, the outcome is a little trickier to forecast, analysts said, given that it comes on the same day as the release of the U.S. consumer price index data. However, based on auction statistics, there will be no shortage of buyers for the 10-year, analysts said. Last month's 10-year auction showed a sturdy outcome. Indirect bids took in about 76% of the total issue, higher than the 12-auction average of 72%. "The primary driver of a buyer's strike was thought to be the trade war and stepping back from the Treasury market," Ben Jeffery, vice president, interest rates trading, at BMO Capital Markets, said in a podcast on Friday. " opposite argument might be true, and that is: why would one preemptively pull back from the Treasury market, rather than demonstrate ongoing sponsorship for Treasuries as a negotiating tool? We have yet to see any clear evidence of foreign sponsorship pulling back from Treasuries." The U.S. 30-year bond auction, meanwhile, could go either way and some analysts said they would not be surprised if it comes out weaker than expected given the spate of poor long-dated sales globally. That has led to the surge in yields on the back end, particularly U.S. 30-year bonds, which hit 5.16% last month, the highest since October 2023. "The 30-year is the poster child for all the market's fiscal concerns," said BNP's Dhingra. "But if you look at the statistics available until April, you can see that the 30-year bond auction numbers have seen pretty stable demand from dealers." But last month's 30-year auction was not well-received, picking up a yield that was higher than the expected rate at the bid deadline, suggesting investors demanded a premium to purchase the bond. Indirect bids were marginally lower than the 12-auction average. The 30-year bond also did not fare well at the April auction. "Demand from foreign investors for 30-year bonds has probably plateaued," said CreditSights' Griffiths.
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Business Standard
06-05-2025
- Business
- Business Standard
SC ruling on BPSL likely to have adverse bearing on JSW Steel's financials
The Supreme Court ruling against JSW Steel's resolution plan for BPSL take over is likely to have an adverse bearing on the financials of the Sajjan Jindal-led steel major which may witness a 13 per drop in revenues, ratings firm CreditSights said on Tuesday. JSW Steel may also lose its competitiveness along India's mineral-rich east coast, where BPSL's steel plant is located, the FitchSolutions company said in a report. CreditSights said it views that the loss of BPSL as modestly credit negative for JSW (Steel). Last week on Friday, the Supreme Court set aside a resolution plan submitted by JSW Steel for BSPL, holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC). A bench comprising Justices Bela M Trivedi and Satish Chandra Sharma criticised the conduct of all key stakeholders in the resolution process -- the resolution professional, the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) -- for enabling what it termed a "flagrant violation" of the IBC, and ordered the liquidation of BSPL under the IBC. CreditSights said if JSW Steel fails in its attempts to save the BPSL asset, the company will have to surrender BPSL back to the NCLT, resulting in a deconsolidation of BPSL's financials. "The deconsolidation (of BPSL) will inevitably reduce JSW's pro-forma steelmaking capacity by 13 per cent, steel production by 13 per cent, revenue by 13 per cent, and EBITDA by 9 per cent," it said. In FY25, JSW Steel produced 26.98 MT crude steel, posting a 6 per cent year-on-year rise over 25.55 MT in FY24. In October-December quarter of FY25, the company saw its net profit slashing almost three-fold to Rs 719 crore from Rs 2,450 crore in same period of the preceding financial year. The company also saw its total income falling to Rs 41,525 crore in the third quarter of FY25 from Rs 42,134 crore in the year-ago period. In April-December (9M FY25), the company's net profit was at Rs 7,651 crore, down from Rs 8,873 crore in the nine-month period of FY24. JSW Steel is scheduled to report its financial numbers for the fourth quarter and entire FY25 on May 23. The steel maker acquired Bhushan Power & Steel (BPSL) in September 2019 after the National Company Law Tribunal (NCLT) approved its resolution plan. The acquisition was completed in March 2021. JSW Group Chairman Sajjan Jindal had said that the acquisition of BPSL marks JSW Steel's entry into the eastern region. The acquisition not only aligns with core business and purpose but also establishes presence and accelerates growth vision in eastern India, Jindal had said in a letter to BPSL employees. Located in Odisha's Jharsuguda, BPSL recorded a crude steel production capacity of 3.38 million tonnes (MT) in FY25. JSW Steel had envisaged ramping up BPSL's capacity to 5 MT, eyeing to benefit from the higher sales and realisations from value-added products such as colour-coated, galvanised sheets, pipes and wires. The report further said that if BPSL goes out, JSW will lose its competitiveness along India's mineral-rich east coast, which BPSL primarily serviced and operated in. CreditSights also suggested JSW to approach the apex court for a review of the order. "In the review, we believe JSW may propose changing the resolution plan to be fully equity funded or convert the debentures to equity, given the use of debt was a key factor resulting in the SC's rejection of the plan," it said. The company could offer penalties and fines for late payment of creditor dues too. If the review is unsuccessful, JSW can then file a curative petition intended as a final recourse in India's legal system, that will be decided by a larger bench. If the SC does not reverse its ruling, JSW would have to surrender BPSL assets to NCLT/lenders. The capex incurred and capacity added subsequently at BPSL will complicate the process, unless the added assets are carved out of the divestiture. A query seeking response of JSW Steel remained unanswered.
CNA
05-05-2025
- Business
- CNA
Apple's first bond offering in 2 years headlines busy primary
Apple is planning a four-tranche bond offering on Monday, its first in two years, using proceeds to repurchase stock and repay outstanding debt, among other purposes, the company said in an SEC filing. The offering size was not stated but CreditSights analysts expect it to raise nearly $5 billion to $6 billion, noting that Apple has $8 billion in debt maturing from May through November. Eight other issuers in the investment-grade primary market are also expected to kick off an unusually active week with estimated total of nearly $35 billion of new debt offerings. These include notes from Comcast, DTE Electric Co and General Motors. New bond supply is rising as credit spreads, or the premium companies pay over Treasuries, have rebounded in the weeks since U.S. President Donald Trump first announced harsh tariffs and then provided temporary relief. Many issuers had planned offerings sooner but were thrown off by the uncertainty of Trump's policies. They are rushing to market before the Federal Reserve meets on Wednesday to avoid the typical volatility that immediately follows the Fed chair's comments after such monthly policymaking meetings. Demand is expected to remain strong as uncertainty pushed investors to look for safety in higher-rated bonds, analysts said. The issuance rush follows six consecutive weeks of outflows from investment-grade funds, the longest streak since November 2022, noted Dan Krieter, director of fixed income strategy at BMO Capital Markets. "It's a pretty attractive space to lock in these all-in yields," said Natalie Trevithick, head of investment grade credit strategy at Los Angeles-based asset manager Payden & Rygel. The average investment-grade bond spread was at 106 basis points on Friday, the latest data shows, or three basis points lower than levels touched the day before. "The issuance is a lot of high quality names today, (and) a lot of it is just regularly planned issuance. There are probably a couple deals that got pushed back from April," Trevithick noted.
