A Revised View of ADP Employment Data-Mischler Debt Market Comment
March 9, 2017   //   by Mischler MarCom   //   Debt Market Commentary  

Quigley’s Corner 03.08.17 -Debt Market View re Latest ADP Data


Investment Grade Corporate Debt New Issue Re-Cap – 7 IG Corporate Deals Felt Like a Vacation vs. Monday & Tuesday Sessions

ADP Number Becoming More Payroll Accurate

IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates for This Week and March

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

New Issues Priced  (UNH, DTE Energy, Realty Income, Western Union, Princeton U Trustees)

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending February 27

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar


5 IG Corporate issuers tapped the dollar DCM today pricing 7 tranches between them totaling $3.10b.  The SSA space featured 2 issuers and 2 tranches totaling $3.50b for an all-in IG day total of 7 issuers, 9 tranches and $6.60b.
The WTD total is now 18% more than this week’s syndicate midpoint average forecast or $39.25b vs. $33.15b.
MTD, we’ve now priced 46% of the IG Corporate mid-range projection for all of March or $52.775b vs. $114.31b.

ADP Number Becoming More Payroll Accurate

How often have you heard this, “If I told you once, I told you a million times.” Or this –  “If it’s not one thing, it’s another.”  Well, if it’s not employment and jobs numbers it’s geopolitical event risks.  No one seems to be able to get it right. Surprises lurk around the globe as well as in the economic data.  Today the ADP Employment Change number surprised BIG TIME to the upside posting 298k against 187k estimates. It was the highest ADP number in three years! The prior was upward revised to by 15k to 261k vs. 246k  The CT10 responded by popping 5 bps in yield. By 9:00am the Treasury 10yr was at 2.56% or 26 bps wider over the last 9 sessions.

As BNP Paribas’ Sean Stevens wrote today:

The ADP number is clearly getting better at predicting Payrolls.  Let’s look at the average miss over the last 6 months including the average overshoot and undershoot.

Using the January 2017 report back to August 2016 and including the upward revision:


Aug. 2016 thru
Jan. 2017
ADP Employment
Avg. Miss 18.2k
Avg. ADP Undershoot 15.5k
Avg. ADP Overshoot 19.5k

Using the January 2016 report back to August 2015:

Aug. 2015 thru
Jan. 2016
ADP Employment
Avg. Miss 58.8k
Avg. ADP Undershoot 112.0k
Avg. ADP Overshoot 43.0k

Economic Data Releases

MBA Mortgage Applications March 3 —- 3.3% 5.8% —-
ADP Employment Change February 298k 246k 246k 261k
Nonfarm Productivity Q4 1.5% 1.3% 1.3% —-
Unit Labor Costs Q4 1.6% 1.7% 1.7% —-
Wholesale Inventories MoM January <0.1%> <0.2%> <0.1%> —-
Wholesale Trade Sales MoM January 0.5% <0.1%> 2.6% 2.4%


IG Primary & Secondary Market Talking Points


  • Realty Income Corp. upsized today’s two-part Senior Notes new issue to $700mm from $650mm at the launch and at the tightest side of guidance.
  • The average spread from IPTs thru the launch/final pricing of today’s 6 IG Corporate-only new issues, that displayed price evolution, was <17.00> bps.
  • BAML’s IG Master Index widened 1 bp to +119 vs. +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS widened 1 bp to 1.12 vs. 1.11.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $20.9b on Tuesday versus $22.7b on Wednesday and $22.7b the previous Tuesday.
  • The 10-DMA stands at $20.4b.


Global Market Recap


  • U.S. Treasuries – 10yr supply & ADP employment did USTs in today.
  • Overseas Bonds – JGB’s and bonds in Europe had a losing day.
  • 3mth Libor – Set at the highest yield (1.10900%) since April 2009.
  • Stocks – U.S. mixed heading into the close.
  • Overseas Stocks – Japan & China red while Hang Seng & Europe closed higher.
  • Economic – ADP employment was very strong for the second month in a row.
  • Overseas Economic – China trade data was whacky. Japan GDP up. German IP strong.
  • Currencies – USD outperformed all of the Big 5. DXY Index back over 102.
  • Commodities – Crude oil crushed on high inventory. Overall bad day for commodities.
  • CDX IG: +0.65 to 63.18
  • CDX HY: +3.18 to 325.51
  • CDX EM: +6.22 to 214.88

*CDX levels are as of 3:30PM ET today.

-Tony Farren


Syndicate IG Corporate-only Volume Estimates for This Week and March


IG Corporate New Issuance This Week
vs. Current
WTD – $39.25b
March 2017
vs. Current
MTD – $52.775b
Low-End Avg. $31.79b 123.47% $113.79b 46.38%
Midpoint Avg. $33.15b 118.40% $114.31b 46.17%
High-End Avg. $34.50b 113.77% $114.83b 45.96%
The Low $25b 157.00% $80b 65.97%
The High $45b 87.22% $140b 37.70%


Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.


Have a great evening!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate


NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches


Here’s a review of this week’s five key primary market driver averages for IG Corporates only through Tuesday’s session followed by the averages over the prior six weeks:

Above is the opening extract from Quigley’s Corner aka “QC”  Wednesday March 08, 2017 edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC observations is one of three distinctive research content pieces produced by Mischler Financial Group. The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

To receive Quigley’s Corner, please contact Ron Quigley, Managing Director and Head of Fixed Income Syndicate via email: rquigley@mischlerfinancial.com or via phone.

*Sources: Bank of America/Merrill Lynch, Bloomberg, Bond Radar, Dow Jones Newswire, IFR, Informa Global Markets, Internal Mischler, LCDNews, Market News International, Prospect News, Standard & Poor’s Ratings Services, S, Thomson Reuters and of course, a career of sources, contacts, movers and shakers from syndicate desks to accounts; from issuers to originators; from academicians to heads of research, and a host of financial journalists, et al.

Mischler Financial Group’s “U.S. Syndicate Closing Commentary”  is produced weekly by Mischler Financial Group. No part of this document may be reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

A Revised View of ADP Employment Data-Mischler Debt Market Comment