Morning Commentary: Primary quiets ahead of holiday weekend; high-grade flows strong

By Cristal Cody

Tupelo, Miss., Nov. 9 – The high-grade primary market quieted on Friday with light activity expected ahead of the long holiday weekend.

The bonds markets will be closed on Monday for the Veterans Day holiday.

Investment-grade supply came in line with syndicate forecasts of about $15 billion to $20 billion of issuance for the week with more than $19 billion of bonds priced through Thursday.

For the week ended Nov. 7, Lipper US Fund Flows reported inflows of $1.85 billion for corporate investment-grade funds, compared to outflows of $3.75 billion in the previous week.

“Flows for U.S. bond funds and ETFs rebounded strongly this past week after four consecutive weeks of outflows,” Yuri Seliger, an analyst with BofA Merrill Lynch, said in a report released on Friday. “The inflow to fixed income was $5.69 [billion] – the highest since January – as flows were stronger for HG, HY, loans and munis.”

The fixed income inflow was up from a $1.9 billion outflow a week earlier.

Flows for high-grade, which includes corporates, Treasuries, agencies and mortgages, “flipped” to a $1.59 billion inflow from a $1.59 billion outflow in the previous week, Seliger said.

Inflows to short-term high grade climbed to $2.65 billion in the past week, the strongest reading in five years, and up from a $2.08 billion inflow the week before.

Meanwhile, outflows from high grade excluding short-term moderated to $1.07 billion from $3.67 billion, according to the report.

Elsewhere in the secondary market, $19 billion of investment-grade bonds traded on Thursday, compared to $19.66 billion on Wednesday, $18.96 billion on Tuesday and $16.21 billion on Monday, according to Trace.

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