Morning Commentary: Convertibles quiet before holiday; Tesla trades lower with shares; SunEdison up

By Rebecca Melvin

New York, Sept. 4 – U.S. convertibles were “all quiet,” a New York-based sellsider said on Friday with trading personnel thinned and equities and Treasuries lower ahead of the Labor Day weekend. Financial markets will be closed on Monday.

Early Friday, the Labor Department said that non-farm payrolls rose 173,000 in August and the unemployment rate fell to 5.1% from 5.3% previously.

The report weighed on stocks as the tally missed some estimates but was likely to be strong enough to support raising rates if the Federal Reserve was leaning in that direction when the Federal Open Market Committee meets in two weeks.

Bank of Richmond Federal Reserve president Jeffrey Lacker said the payrolls number didn’t change the picture for monetary policy. Lacker is a voting member of the committee and has supported raising rates sooner rather than later.

In the early going Tesla Motors Inc.’s 1.25% convertibles due 2021 printed at 93.3, which was down about 1.3 points on the day, according to Trace data. Shares of the Palo Alto, Calif.-based electric car maker were down 1.3% at $242.43 in light volume.

Shares of SunEdison Inc. were up again, however, supporting the beaten-down convertibles, which were pummeled last month.

Shares of the renewable power company were up another 2%, after jumping 11% on Thursday. The lift was inspired by comments from chief executive Ahmad Chatila that the company could be cash flow positive as soon as the end of this year. The cash flow will come from renewable energy projects that SunEdison invests in and sells.

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