Bank of America’s $8bn bond issuance Friday (16 October) closed out an otherwise tepid week in the investment grade bond market that saw a mixed bag of results from the big six US banks.
The major US banks have had a banner first half of the year but a jump in global yields in the past two months, rising interest rates and continued geopolitical tensions have slowed down fixed income trading activity.
JP Morgan, Goldman Sachs and Bank of America all posted weaker fixed income trading revenues in their Q3 results, but from a creditors’ perspective, the results were overall positive (even if equity markets might disagree), one IG portfolio manager said.
Perhaps more importantly, commentary on the earnings calls pointed to a surprisingly optimistic tone for consumer strength.
"They're relatively sanguine about the consumer, which is the thing we're looking at,” the portfolio manager said. “I'm looking to see if the K-shaped economy really broadens out to be something related to the corporate side, where highly leveraged companies and their inability to handle this higher-rate environment will start to become an issue.”
Investors were hoping for more bank supply this week and had to wait until...
