HYBRIDS: Hybrids: Week in Review
- Total was the top performer with longer dated bonds 1.2pts higher on the week. Given the sell-off in bunds on Friday, this rally may be short-lived.
- Vodafone refinanced €1.4bn of NC26 perps with a dual-tranche NC6.6 and NC9.6 deal.
- We looked at upcoming refinancing for other borrowers. Iberdrola will likely come in January to handle its 1.6bn 1.874% NC26. BP is likely to reduce its Hybrid stack under the 10% rule before the June 26 Call. The company could be opportunistic in its timing but has several months of room.
- CityCon perps fell by as much as 1.8pts on the S&P cut to B.
- The is a risk of a Fitch rating action on France this evening. This could have a notching affect on La Poste FRPPT and EDF. EDF is already much lower with S&P.
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US: Tsy Sec Bessent on BBG TV Live
Treasury Secretary Bessent, interviewed on Bloomberg TV: "I think we could be heading into a series of rate cuts here, and could start with 50bps in September"
- "One of the most politicized governors [Kugler] just left the board"
- If data had been accurate, it's possible Fed cuts earlier, we should be 150, 175bps lower on rates by now.
- "We'll see" on how quickly Miran can be confirmed as Fed nominee. Is "hopeful" for September meeting
- "There is no accountability" at the Fed, in reference to renovations project
- Trump is concerned over the foundations at the Fed
- Would not expect Miran to stay on beyond the remainder of Kugler's term
When asked on whether BLS could suspend NFP releases on quality concerns - seems to talk down comments of BLS nominee as being made outside of office, akin to when Bessent called for a Shadow Fed chair.
- We're concerned on integrity of data, what we want is "good" data. Antoni is "well qualified" as BLS chief, and was there through the interview process.
US TSYS: /STIR: Curve A Touch Steeper As Bessent Points To Series Of Rate Cuts
2s10s bull steepens by ~1bp after Tsy Secretary Bessent reaffirms his idea of a 50bp catch-up rate cut in September, while suggesting that could represent the start of a “series of rate cuts”.
- FOMC-dated OIS fairly stable around 62bp of cuts through year-end, while SFRZ6 rallies by 1.5bp.
GLOBAL POLITICAL RISK: Trump To Speak To Euro Leaders Ahead Of Putin Summit
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CNN reports that the high-profile 15 August meeting between US President Donald Trump and Russian President Vladimir Putin will take place at Joint Base Elmendorf-Richardson in Anchorage, Alaska.
- In preparation for Friday’s meeting, Secretary of State Marco Rubio spoke with Russian Foreign Minister Sergey Lavrov on 12 August. “Both sides confirmed their commitment to ensure a successful event,” per a State Department readout.
- At 09:00 ET 14:00 BST, Trump will hold an emergency call with Ukrainian President Volodymyr Zelenskyy and European leaders to discuss the Ukraine war and strategy for the Putin meeting. Zelenskyy, NATO Secretary General Mark Rutte, and several European leaders will dial into the White House from Germany.
