The credit markets in September saw a record-breaking amount of new deals that topped expectations, pricing $170.55Bln on projections of $125Bln. The new Issue calendar has topped expectations for 9straight months. The U.S. Treasury market saw 2’s—10’s close positively slopped at +14 basis points, while 2’s-30’s closed the month positively sloped +47 basis points as a steepening trade emerged. Spreads were 5 to 20 basis points tighter and traded in a 10-30 basis point range. September saw heavy secondary trading activity as lower rates had investors selling credit to buy the new issue calendar once again.

In mid-September, post-Fed rate cut, the credit markets experienced volatility, and we saw heightened sentiment among investors, as they digested the 50-basis point rate cut and concerns about a slowdown in the U.S. economy. The month saw $5.4Bln of net client selling continuing the trend of the first half of the year that saw heavy net client selling.

IIG credit spreads in September were 5-20 basis points tighter and spreads traded in a 10-30 basis point range. The US Treasury market saw 2yr notes lower by -24 basis points, 10yr notes lower by -6basis points and the 30yr closed the month -2 basis points lower. Looking at U.S. Treasury rates in September, we saw the month begin with 2’s — 10’s inverted by 4 basis points and 2’s — 30’s positively slopped at +25 basis points, closing the month with 2’s — 10’s positively slopped at +14basis points and 2’s — 30’s positively slopped at +47 basis points as a steeping trade emerged post Fed rate cut. At mid-month we saw the lows on U.S. Treasury rates just prior to the Fed rate cut when the 2yr was at 3.56%, 10yr at 3.63% and 30yr at 3.94%. As we look at the markets, the Fed began the rate cut cycle with a 50-basis point rate cut at the September 18th meeting and they will not convene again until November 7th, post Presidential election. We will get unemployment data on Friday and the Fed will have plenty of data to digest over the next month before there next Fed meeting. The CD index opened September ’24 at 52.6 and traded in a tight range hitting the MTD high of 54.3 on 9/06/24 before moving steadily lower and reaching the MTD low of 47.9 on 9/19/24. Following the Feds 50 basis point rate cut the CDX index spiked to 53.4 before closing the month at 52.8 on 9/30/24 almost matching the opening level for the month.

The Bloomberg Barclays U.S. Aggregate Average OAS opened September 24’ at .97 and traded in a tight range hitting the MTD high of .99 on 9/10/24 and 9/11/24, and then steadily traded lower to .89 and closed the month at .89 on 9/30/24. The average spread for the month was .94 The Bloomberg Barclays U.S. Aggregate OAS began January 23’ at 1.32

IG credit flows in September came in at a massive $780Bln (the highest level so far this year) vs trailingmonths: August $694Bln, July $691Bln, June $592Bln, May $659Bln, April $757Bln, March $700Bln, February $717Bln, and January $742Bln.

The trailing six-month average volume is $695Bln. Spreads were 5-20 basis points tighter in September, as lower rates and a steady flow of new issues pushed credit tighter. September saw $5.4Bln of net client selling as investors continued the selling trend we saw in January, February, March, May, June, July and August.

On the credit curve in September net client selling was seen in 3-7yr ($4.5Bln), 12-30yr (4.2Bln) and 7-12yr paper($1.6Bln) while 1-3yr and 0-1yr paper saw net client buying. Financials, Energy and Consumer Discretionary led the charge in net client selling while Utilities, Industrials, and Technology all saw net client buying.

Looking at the markets from a ratings perspective, Baa1/Baa3 and A1/A3 paper saw all the net client selling while Aa1/Aa3 and Aaa paper saw light net client buying in a flight to quality trade.

See IG Credit Flow charts on the following page.

The month of September saw a record-breaking month of new deals that topped expectations and heavy secondary trading flows continued with net client selling. September’s heavy issuance topped the previous record of $164Bln priced September of 2020. U.S. Treasuries saw another month of heavy rate moves, resulting in lower yields along with tighter credit spreads. The U.S. Treasury curve saw 2’s 10’s close positively slopped at +14 basis points and 2’s 30’s closed positively slopped by +47Bps. We closed September with the Fed cutting rates and signaling rates must come down a lot over the next 12 months. The month of October will see the start of 3rd Qtr earnings season kicking off, potentially further interest rate volatility and economic uncertainty. Geo-political headwinds will remain in the headlines for the rest of the year 2024 with chaos in the Middle East and the Ukraine war with no end in sight, and we are now inside 35 days until the Presidential election.

As we begin October, we get unemployment data on Friday, upcoming key data reports and US domestic issuers will be in their respective earnings blackout periods. The big six money center banks are scheduled to kick off earnings Oct. 11 with JPMorgan and Wells Fargo. The new issue calendar is calling for $95Bln for the month of October with a potential mad dash to issue in front of the election.

Great job by the AmeriVet Securities team in September, as we were a Co-Lead Manager on $1.5Bln 21NC20 deal for UBS Group, Co-Manager $2Bln 11NC10 deal for Barclays PLC, Co-Manager on $2.5Bln two-part deal for HSBC Holdings PLC, Co-Manager on $2.3Bln three-part deal for Bank of Nova Scotia, CoManager on $4Bln three-part deal for Uber Technologies Inc, Junior Co-Manager on $1.1Bln 15NC10 deal for Citigroup Inc and Co-Manager on $750mm deal for Ares Strategic Income Fund as well as Joint Lead on $1.45Bln transaction for SBA Tower and $1.547Bln transaction for Ford Credit Auto Owners Trust 2024-C.

The AmeriVet Securities sales team continues to bring in a large volume of differentiated orders from Tier II and Tier III accounts on new issue deals.