Morning Commentary: Federal Reserve meeting in focus; Twitter, DISH convertibles active

By Abigail W. Adams

Portland, Me., July 31 – The convertible secondary space was quiet early in Wednesday’s session with all eyes on the Federal Reserve’s much anticipated decision regarding interest rate cuts.

The event will likely be a non-event with a quarter point rate cut already priced into the market, sources said.

However, some continue to hold out hope for a rate cut of up to a half point.

While the convertible secondary space was quiet in the run up to the Federal Reserve’s decision, Twitter Inc.’s 0.25% convertible notes due 2024 were again major volume movers.

The 0.25% notes rose about 0.625 point outright in active trading.

However, they were contracting dollar-neutral as stock continued to soar in the wake of a better-than-expected earnings report.

The 0.25% notes were changing hands around 106.25 early in Wednesday’s session.

They were contracted 0.25 point dollar-neutral on the move up, a market source said.

There was about $8 million in reported volume a little over one hour into Wednesday’s session.

Stock broke out to a new 52-week high on Wednesday after several analysts raised their price target for the stock.

Twitter stock traded up to $42.25, an increase of 3.05%, shortly before 11 a.m. ET.

Twitter stock has been on the rise since the social media platform beat analyst expectations in its second-quarter earnings report late last week.

Meanwhile, DISH Network Corp.’s 3.375% convertible notes due 2026 were trading down on an outright and dollar-neutral basis on Wednesday.

The notes were continuing their downward momentum after releasing a disappointing second-quarter earnings report earlier in the week.

The notes were down another 1 point outright early Wednesday to change hands around 92.625 after a 4 point drop on Tuesday.

They were contracted between 0.25 point and 0.375 point dollar-neutral, a market source said.

There was about $5 million on the tape early in the session with a better seller in the market, a source said.

The trading activity was mostly follow-through from Tuesday’s session.

DISH stock was down to $34.47, a decrease of 1.37%, shortly before 11 a.m. ET.

In addition to a second-quarter earnings miss, Moody’s Investors Service placed DISH on downgrade watch due to the $5 billion divestiture deal between DISH and T-Mobile/Sprint.

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