Mutual fund inflows have been fairly anemic by comparison lately, normally a bearish indicator, but who needs mutual fund liquidity to move the market higher when we are in the midst of strong corporate issuance?
On a normal day in a normal month there are $3-$5 billion of new issues, spread among 3-8 companies. Yesterday should have seen zero issuance, as it was the middle day of the Treasury’s 3-day quarterly auction when the government was selling a record $25 billion of 10-year notes. Corporate issuers normally stand aside when the government borrows such a sum.
But this credit bull market is so strong that we have repeatedly seen strong corporate issuance in the midst of strong Treasury issuance. Yesterday however was stunning – we saw at least 18 companies borrow over $13 billion.
And despite this issuance wave, credit spreads actually improved a little.
So, what does this mean? A good chunk of this loot could find its way into the stock market. Stay tuned. No guarantees but certainly something to watch. I’m still watching the Almighty Dollar as my lead however and it is slightly higher this morning.
I was stopped in my lobby this morning, Lou Dobbs asked to see my green card. Good luck today.