Abdullah Karatash
The Fed minutes shed little light on the exit strategy
Stocks turned green and treasury bonds sold off in a risk-on trade while oil bumped up against $100 a barrel.
The Fed minutes shed little light on the exit strategy for liquidity support for the markets.
A de facto QE (quantitative easing) post Memorial Day appears more and more likely.
There was a weak tone to the markets early in the morning with Greece the musical still playing.
By the afternoon, the tone got better as stocks closed firmly in positive territory.
Corporate bonds traded well with financials, particularly Goldman, leading a late-day rally.
In the Yankee space, Australian financials were hit hard by some rating downgrades by Moody's.
There also was a fair amount of action around Trust Preferred securities (TRUPS) and bank hybrids as Fifth Third bank brought a par regulatory call sooner than expected.
Premium hybrids and TRUPS mostly traded down; negative yield to call…players who pore over their bond indentures will do well.
All eyes are on the FDIC (Federal Deposit Insurance Corp) re: the phasing out of TRUPS from Tier 1 capital and / or new capital rules.
In new issues, rail company Norfolk Southern sold $400 million of 100 year bonds, a week after MIT's long issue, at +175.
Alabama Power sold $200 million of 10 year bonds at +82 and $250 million of 30 year bonds at +95.
Walt Disney sold $500 million of 10 year bonds at +60.
REIT (real estate investment trust) UDR sold $300 million of 7 year bonds at +190.
Insurance company Liberty Mutual Group sold $600 million of 10 year bonds at +210.
Initial jobless claims numbers are out tomorrow.
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