Bostic Says Labor Market Gives Fed 'Luxury' to Wait on Policy
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Busy September US corporate bond market expected despite lower rate cut odds
By Matt Tracy and Shankar Ramakrishnan (Reuters) -Companies' U.S. dollar bond issuance will likely carry September to one of the heaviest months for investment-grade supply this year, despite more volatility in Treasury yields as hopes for a bigger Federal Reserve interest rate cut were dimmed by recent data that pointed to still-sticky inflation, said bankers and strategists. September has historically averaged roughly $140 billion of investment-grade bond issuance, according to data from Informa Global Markets. But last year set a record for the busiest September with over $172 billion in new deals, as companies rushed to seize on healthy investor appetite for higher yields, according to the IGM data. The latest inflation data this week showed U.S. producer prices surged while consumer prices rose in line with forecasts, in turn leading the market to place lower odds on a substantial interest rate cut from the Federal Reserve next month. But bond bankers expect this September could again tally robust corporate bond volumes despite the high inflation print and a change in the Fed's expected rate-cutting path, as corporate treasurers are not expected to let this sway their planned issuance. "Data pointing to some delay in interest rate cuts probably does not influence corporate bond issuance in September," said Victor Forte, head of IG capital markets and U.S. debt syndicate at New York City-based investment bank Mizuho Americas. "It is traditionally a busy month and is expected to be so again regardless of small changes in spreads (or) yields,' Forte added. Corporate credit spreads, or the premium over Treasuries paid by companies, widened a few basis points on some corporate bonds this week, but they have not moved materially enough to shift company treasurers' September bond issuance plans next month, Forte said. 'Their decision to issue bonds in September hinges more on corporate finance needs than it is trying to predict when the Fed may cut interest rates," he said. Corporate spreads on average moved about 1 bp tighter this week and were last at 77 bps, making them just 3 bps closer to their tightest levels since reaching 74 bps on July 28, 1998, according to ICE BAML index. Bond yields were at 4.94% or 41 bps inside levels they touched in January, the same index data showed. Bond bankers and analysts similarly expect a busy August for IG bond issuance heading into the expected high September volume, even with an expected quiet period in the two weeks before Labor Day. "With expectations for annual IG supply wrapped around $1.5 trillion in future years, you can expect busier calendars as we approach end of summer going forward,' said Kyle Stegemeyer, head of IG debt capital markets and syndicate at Minneapolis-based U.S. Bank. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Engineering service firm Legence files for US IPO
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FACT FOCUS: No, taxpayers will not receive new stimulus checks this summer
Don't splurge just yet. Rumors spread online Friday that the U.S. government will soon be issuing stimulus checks to taxpayers in certain income brackets. But Congress has not passed legislation to authorize such payments, and, according to the IRS, no new stimulus checks will be distributed in the coming weeks. Here's a closer look at the facts. CLAIM: The Internal Revenue Service and the Treasury Department have approved $1,390 stimulus checks that will be distributed to low- and middle-income taxpayers by the end of the summer. THE FACTS: This is false. Taxpayers will not receive new stimulus checks of any amount this summer, an IRS official said. Stimulus checks, also known as economic impact payments, are authorized by Congress through legislation and distributed by the Treasury Department. Republican Sen. Josh Hawley of Missouri last month introduced a bill that would send tax rebates to qualified taxpayers using revenue from tariffs instituted by President Donald Trump. Hawley's bill has not passed the Senate or the House. The IRS announced early this year that it would distribute about $2.4 billion to taxpayers who failed to claim on their 2021 tax returns a Recovery Rebate Credit — a refundable credit for individuals who did not receive one or more COVID-19 stimulus checks. The maximum amount was $1,400 per individual. Those who hadn't already filed their 2021 tax return would have needed to file it by April 15 to claim the credit. The IRS official said there is no new credit that taxpayers can claim. Past stimulus checks have been authorized through legislation passed by Congress. For example, payments during the coronavirus pandemic were made by possible by three bills: the Coronavirus Aid, Relief and Economic Security Act; the COVID-related Tax Relief Act; and the American Rescue Plan Act. In 2008, stimulus checks were authorized in response to the Great Recession through the Economic Stimulus Act. The Treasury Department, which includes the Internal Revenue Service, distributed stimulus payments during the COVID-19 pandemic and the Great Recession. The Treasury's Bureau of the Fiscal Service, formed in 2012, played a role as well during the former crisis. Hawley in July introduced the American Worker Rebate Act, which would share tariff revenue with qualified Americans through tax rebates. The proposed rebates would amount to at minimum $600 per individual, with additional payments for qualifying children. Rebates could increase if tariff revenue is higher than expected. Taxpayers with an adjusted annual gross income above a certain amount — $75,000 for those filing individually — would receive a reduced rebate. Hawley said Americans 'deserve a tax rebate.' 'Like President Trump proposed, my legislation would allow hard-working Americans to benefit from the wealth that Trump's tariffs are returning to this country,' Hawley said in a press release. Neither the Senate nor the House had passed the American Worker Rebate Act as of Friday. It was read twice by the Senate on July 28, the day it was introduced, and referred to the Committee on Finance. ___ Find AP Fact Checks here: Melissa Goldin, The Associated Press
