High yield corporate bonds were slightly weaker yesterday but rebounding a bit today. Two new-issues for $950M in proceeds priced yesterday and we are not expecting anything further until after the Fed meeting. The Street is saying it is a 98% certainty that the Fed raises by 25bps tomorrow. OWIC’s (offers wanted in competition) are outpacing BWIC (bids wanted in competition) today in high yield by over $100M, which backs the stronger high yield market. Moody’s has recently reported that default rates continue to decline and are expected to decline further toward 2.5% by year-end. The Street is mostly quiet today as Jeff Sessions’ testimony is expected to be a close second in viewership to that of Comey last week.
Oil is giving up yesterday’s slight gains. It is reported that Brent Crude is in “death cross” territory today, with the 50 day moving average falling below the 200 day moving average for the first time since May 2016. West Texas Intermediate (WTI) entered death cross territory earlier this month. The EIA reported a surprise build in crude oil storage, with the first build in nine weeks, which is not good for positive pricing.