Fixed Income Recap:

High yield unchanged yesterday with the newer issues larger in size trading in great volume.  ALLY and RAD both very active as well as Newpage, FDC, and OCR on earnings related movement.  Interesting story on Bank of America out discussing a potential $13 bil in capital boost from China Banking Stake.  As well, Merrill Lynch vehicle may have hid billions in subprime securities.  China imports slowing down hurts stocks overnight on global growth concerns.  This morning opening weaker, with S&P down about -6.80 and high yield down about ¼ this morn.  

Mixed volume to open up the week as new issues again took the spotlight in an unusually active August as issuers rush to take advantage of the twin benefits of tight credit spreads and low absolute yields.  Over $6BN in issuance headlined by an upsized $2BN from APC (Ba1/BBB) at ~415/7yr (6.375%) which I originally was thinking low-7%, it was just last week that we were trading the APC 5.95 16 wrapped around $97 (6.55%) and this morning APC 6.95 19 was trading $103 (6.50%) down in the street.  After a dismal non-farm payroll number Friday, today's deals, especially that of APC, went to show that there is cash to be put to work in IG corporates and buyers are ending up with no other choice but to buy the new deals when they come. 

Fixed Income Most Recent Axes:

Afrisam,  Thomson Technicolor, Vantage Drilling, Ineos, Eircom,  BP

Sitel, FAGEGA, Lyondell, Mercer, NewPage, Lyondell, Claire’s, Bon Ton, Rite Aid

Treasury Rates Commentary

• An extremely quiet summer session in US Treasuries yesterday with many investors awaiting today’s FOMC announcement and any quantitative easing measures.  Treasuries came off their high early in the New York session and settled into a tight range throughout the remainder of the day on very quiet flows. At 3PM benchmarks were mainly lower in price with the exception of the 10 year.  10/30s continuing its recent steepening trend closing the day at 118.4bps.
• Today the August refunding auctions will start with the Treasury's sale of $34Bln 3 year notes ($24Bln 10s and $16Bln 30s Wednesday and Thursday respectively), the auction will be followed shortly thereafter with the highly anticipated FOMC announcement.

Upcoming Treasury Auctions and Fed Events

Date Time                   Event                                                            Amount                                  Prior

08/10/10                      3 Year Note Auction                               $34Bln                                     $35Bln

08/11/10                      10 Year Note Auction                             $24Bln                                     $24Bln

08/12/10                      30 Year Bond Auction                             $16Bln                                     $16Bln