HYBRIDS: Hybrids: Week in Review
• Alliander brought a €500m PerpNC10 at Z+150 or Sub_Sen +70bps. We thought that this was very tight, but many recent perps have seen exceptional demand. Final books showed 6x cover. The deal rallied in secondary and is now well inside the Call32 on a Sub_Sen basis of 64 vs 73. On Z spread, +144 vs +136. 8bps for 3.5yrs with other utils showing 9+bps per year.
• Orsted received a legal reprieve in Rhode Island. Perps +25c on the week.
• Evonik’s profit warning sent the EVKGR 4.25 Call31 90c lower.
• TenneT announced the sale of 46% of its German grid to APG, NBIM and GIC for €9.5bn. TENN 4.875 Call31 rallied 30c. TENN is now trading very close to VIEFP and around +10 to RWE on an interpolated basis.
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MNI: US MBA: MARKET COMPOSITE -0.5% SA THRU AUG 22 WK
- MNI: US MBA: MARKET COMPOSITE -0.5% SA THRU AUG 22 WK
OUTLOOK: Price Signal Summary - Bear Threat In Oil Futures Still Present
- On the commodity front, Gold traded higher Tuesday. The medium-term trend condition remains bullish - MA studies are in a bull-mode position highlighting a dominant uptrend. The sideways direction that has been in place since the Apr peak appears to be a pause in the uptrend. A stronger resumption of gains would open $3439.0, the Aug 23 high. Key resistance and the bull trigger is at $3500.1, the Apr 22 low. First key support is $3268.2, the Jul 30 low.
- In the oil space, a bear cycle in WTI futures remains intact and the latest round of short-term gains appear corrective - for now. A key support at $61.99, the Jun 30 low, has recently been breached, strengthening a bearish theme. A continuation lower would open $57.71, the May 30 low. Key short-term resistance has been defined at $69.36, the Jul 30 high. Clearance of this level would cancel a bear theme. Initial resistance to watch is $66.56, the Aug 4 high.
FED: Former Fed's Dudley Writes: "I Wasn’t Very Worried About the Fed. Now I Am"
- "the attack on Cook represents a major escalation that could end very badly. Never before has a president tried to fire a Fed governor, and there’s much more at stake than one person’s job.
- "If Cook goes, Trump will soon have appointed four of the central bank’s seven governors — a majority. This wouldn’t immediately allow him to exert control over the Federal Open Market Committee, whose 12 voting members set monetary policy. It would, though, provide the president with more leverage.
- "The Board of Governors could, for example, refuse to reappoint some or all of the 12 regional Federal Reserve Bank presidents, whose five-year terms come up for renewal in February 2026 — and five of whom vote on the FOMC on a rotating basis. In theory, this could be a way to populate the FOMC with members that would do Trump’s bidding, empowering the president to get the big rate cuts he seeks."
