Morning Commentary: High-grade supply slows on Fed watch; Lloyds Banking markets issue

By Cristal Cody

Tupelo, Miss., Jan. 29 – Primary action slowed early Wednesday in the investment-grade bond market with one issuer offering new paper as market focus shifts to the Federal Reserve’s monetary policy decision due later in the session.

Lloyds Banking Group plc is offering senior callable fixed-to-fixed rate notes due 2026 on Wednesday. The fixed rate will reset in February 2025.

Week to date, high-grade deal volume totals more than $6 billion, led by Union Pacific Corp.’s $3 billion four-part sale of registered fixed-rate senior on Tuesday.

The primary market was quiet on Monday.

About $20 billion to $25 billion of high-grade volume was expected for the week, according to syndicate sources.

The Federal Reserve will release the Federal Open Market Committee’s monetary policy decision, followed by a press conference from Fed chairman Jerome Powell, at 2 p.m. ET.

No interest rate changes are anticipated from the Fed, sources report.

The FOMC’s next meeting will be March 17-18.

In other market action, the three-month Libor yield was 3 basis points tighter at 177 bps over the morning, a source said.

Looking at secondary market data, trading volume totaled $21.59 billion on Tuesday, up from $18.12 billion on Monday, according to Trace data.

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