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Investors Reallocate Away From Treasuries
From the Buzz & Banter: On Tuesday, large amounts of capital moved from fixed-income ETFs to stock ETFs.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

I noted yesterday on the Buzz & Banter [subscription required], and Peter Atwater added additional color this morning [subscription required], that there was a large reallocation away from fixed-income ETFs and into equity ETFs on Tuesday. I'm hearing that the asset allocation trade was also occurring in the cash Treasury market, in addition to a large number of rate locks for the tidal wave of investment-grade (IG) corporate issuance over the last two days.

On Tuesday, there were 12 issuers pricing 28 tranches for $20 billion (a record number of tranches), and Wednesday there were 27 tranches from 14 issuers for $21.55 billion, the largest single-day IG issuance of the year. For most of the issues, there was tightening from the initial guidance, and the overall market moved a fraction of a basis point for the day versus Treasuries. So, essentially, the market swallowed the new issuance whole without even a blink.

My thinking is that the wave of corporate issuance is just the marginal reason for the backup in Treasuries this week. Last week the squeeze was on, and this left the market overbought and extended. Moreover, with the Ukraine situation starting to subside, and the market already set up for poor economic activity in the first quarter, there was little buying support at 2.61% in the 10-year. At these levels, I don't feel like there's any great bias being placed for tomorrow's number. The consensus has certainly moved down by about 20K to 130K (vs the 150K Bloomberg estimate).

Twitter: @MichaelSedacca

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

More From Michael Sedacca
Investors Reallocate Away From Treasuries
From the Buzz & Banter: On Tuesday, large amounts of capital moved from fixed-income ETFs to stock ETFs.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

I noted yesterday on the Buzz & Banter [subscription required], and Peter Atwater added additional color this morning [subscription required], that there was a large reallocation away from fixed-income ETFs and into equity ETFs on Tuesday. I'm hearing that the asset allocation trade was also occurring in the cash Treasury market, in addition to a large number of rate locks for the tidal wave of investment-grade (IG) corporate issuance over the last two days.

On Tuesday, there were 12 issuers pricing 28 tranches for $20 billion (a record number of tranches), and Wednesday there were 27 tranches from 14 issuers for $21.55 billion, the largest single-day IG issuance of the year. For most of the issues, there was tightening from the initial guidance, and the overall market moved a fraction of a basis point for the day versus Treasuries. So, essentially, the market swallowed the new issuance whole without even a blink.

My thinking is that the wave of corporate issuance is just the marginal reason for the backup in Treasuries this week. Last week the squeeze was on, and this left the market overbought and extended. Moreover, with the Ukraine situation starting to subside, and the market already set up for poor economic activity in the first quarter, there was little buying support at 2.61% in the 10-year. At these levels, I don't feel like there's any great bias being placed for tomorrow's number. The consensus has certainly moved down by about 20K to 130K (vs the 150K Bloomberg estimate).

Twitter: @MichaelSedacca

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

More From Michael Sedacca
Daily Recap
Investors Reallocate Away From Treasuries
From the Buzz & Banter: On Tuesday, large amounts of capital moved from fixed-income ETFs to stock ETFs.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

I noted yesterday on the Buzz & Banter [subscription required], and Peter Atwater added additional color this morning [subscription required], that there was a large reallocation away from fixed-income ETFs and into equity ETFs on Tuesday. I'm hearing that the asset allocation trade was also occurring in the cash Treasury market, in addition to a large number of rate locks for the tidal wave of investment-grade (IG) corporate issuance over the last two days.

On Tuesday, there were 12 issuers pricing 28 tranches for $20 billion (a record number of tranches), and Wednesday there were 27 tranches from 14 issuers for $21.55 billion, the largest single-day IG issuance of the year. For most of the issues, there was tightening from the initial guidance, and the overall market moved a fraction of a basis point for the day versus Treasuries. So, essentially, the market swallowed the new issuance whole without even a blink.

My thinking is that the wave of corporate issuance is just the marginal reason for the backup in Treasuries this week. Last week the squeeze was on, and this left the market overbought and extended. Moreover, with the Ukraine situation starting to subside, and the market already set up for poor economic activity in the first quarter, there was little buying support at 2.61% in the 10-year. At these levels, I don't feel like there's any great bias being placed for tomorrow's number. The consensus has certainly moved down by about 20K to 130K (vs the 150K Bloomberg estimate).

Twitter: @MichaelSedacca

< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

More From Michael Sedacca
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