Un-Employment Data Means…(?); Feeding Frenzy For Fixed Income: NASDAQ OMX Headed to Debt Capital Markets.

Ron Quigley, Mischler Financial
Ron Quigley, Mischler Financial

Courtesy of Guest Contributor Ron Quigley, Managing Director of U.S. Syndicate and Primary Sales for Mischler Financial Group.

 May 3-2013–We need 200k new jobs a month, or 2.4 million annually just to put a dent in unemployment.  It takes, on average, about 125k new jobs per month to keep up with population growth! …..we would need to add 360k new jobs per month or just shy of 13 million jobs across three years to take unemployment to 6%.  The last time we ever had 516k new jobs in one month was May 2010.  Since then, that’s 36 months folks, we’ve averaged 119k new jobs per month.  So, by 2020, when my 6-year old daughter becomes a teenager, we will have taken unemployment down from 7.6% to 5.4%.

Today was a well-deserved breather for fixed income syndicate desks, but rest assured origination and syndicate is hard at work on next weeks’ calendar of visitors to the IG DCM.  This week we witnessed one of the single most impressive lists of high quality issuers in a long time, if not ever!  Demand has been very strong with concessions non-existent on the week. (See below chart).  Primary market mechanics are actually pretty simple though – liquidity is defining the global credit marketplace.  For the week ending May 1, Lipper reported an inflow of $1.33 billion into corporate investment grade funds.  When products are so heavily bought, prices go up and yields go down.  Hence this week, we’ve seen CDX.IG.20 tighten another 3.96 bps as of yesterday’s close to its firmest level in 5.5 years.   Meanwhile the VIX or “fear factor” ratcheted in 0.71 points in the same time period.  Blue chip issuers dominated the leaderboards and I strongly suspect we’ll be seeing utilities entering the arena VERY shortly.

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