Morning Commentary: Convertibles trading ‘anemic’ post GDP data; Anywhere Real Estate up

By Abigail W. Adams

Portland, Me., Oct. 26 – The convertibles secondary space was at a crawl early Thursday with few names on the tape as markets digested the latest macro data.

Equity indexes were mixed early in the session after the latest Gross Domestic Product report blew past expectations with the consumer-powered economy growing at the fastest clip since 2001.

However, the report also contained a lower-than-anticipated quarterly personal consumption expenditure print with the monthly PCE report slated for release on Friday.

The data continued to fuel ambiguity about the future rate environment, sources said.

Equity indexes were mixed with the tech heavy Nasdaq Composite the laggard while the small cap index outperformed.

The Dow Jones industrial average was down 39 points, or 0.12%, the S&P 500 index was down 0.50%, the Nasdaq Composite index was down 0.89% and the Russell 2000 index was up 0.63% shortly before 11 a.m. ET.

Treasuries responded favorably to the data with yields coming in after a double digit climb the previous session.

There was $27 million in reported convertibles trading volume about one hour into the session with no name seeing more than $3 million in reported volume, a source said.

Anywhere Real Estate Inc.’s (formerly Realogy Group LLC) 0.25% exchangeable notes due 2026, an off-the-run issue that rarely trades in volume, was among the most actively traded names on the tape early Thursday.

The high-premium notes edged higher early in the session on the heels of earnings.

The 0.25% notes were up about 0.25 point outright. They were trading at 74.5 early in the session with the yield about 11.875%, a source said.

There was $3 million in reported volume.

While not equity sensitive, Anywhere Real Estate’s stock was trading at $4.54, an increase of 4.37%, shortly before 11 a.m. ET.

Anywhere Real Estate reported mixed earnings earlier in the week with the company missing on the bottom line but beating on the top.

The company’s straight debt responded favorably to the report with the company engaged in a series of cost reduction and debt reduction measures, sources said.

Its junk bonds jumped 2 to 4 points on Tuesday after the earnings release.

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