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Bond Market News
PMI Comes in Stronger Than Expected; Swire, Ford Price Bonds
August 22, 2025
US Treasury yields ended 3-4bp higher across the curve. The preliminary S&P PMIs showed signs of a recovery in the manufacturing sector with the services sector remaining solid. The Manufacturing PMI came-in at 53.3, much better than expectations of 49.7. The Services PMI came-in at 55.4 vs. expectations of 54.2. Initial jobless claims for the previous week rose by 235k, worse than expectations of 225k.
Several Fed speakers came out with their take on monetary policy. Cleveland Fed President Beth Hammack said that she would not see a case for reducing rates if the FOMC meeting were to be held tomorrow, citing recent trends in inflation. Atlanta Fed President Raphael Bostic said that he sees one rate cut as appropriate this year. Chicago President Austan Goolsbee said that the recent services inflation shooting up may be a “dangerous data point”. Boston Fed President Susan Collins suggested that it might be appropriate to cut rates in September if labor market conditions posed higher risks than inflation. Lastly, James Bullard, a contender for the next Fed chairman position, said that the Fed could cut rates by as much as 100bp going into 2026.
Looking at US equity markets, the S&P and Nasdaq ended 0.3-0.4% lower respectively. US IG and HY CDS spreads widened by 0.8bp and 4.4bp each. European equity markets ended lower while FTSE ended higher. The iTraxx Main CDS spreads were 0.9bp wider and Crossover spreads widened by 2.8bp. Asian equity markets have opened in the green today. Asia ex-Japan CDS spreads were 0.2bp tighter.
New Bond Issues
Swire Pacific raised $500mn via a 7Y bond at a yield of 4.694%, 35bp inside initial guidance of T+100bp area. The senior unsecured note is rated A3 (Moody’s). Proceeds will be used for onward lending within the group for working capital and general corporate purposes.
Ford Motor Credit raised £400mn ($536mn) via a 6Y bond at a yield of 6.185%, ~20bp inside initial guidance of UKT+215/220bp area. The senior unsecured note is rated Ba1/BBB-/BBB-, and received orders of over £1.1bn ($1.5bn), 3.5x issue size. Proceeds will be used for general corporate purposes.
Rating Changes
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Mitsubishi Estate Downgraded To ‘A’ On Expansion Of Real Estate Development Business; Outlook Stable
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OCI N.V. Downgraded To ‘BB’ On Completed Disposals And Further Dividends; Outlook Developing
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Tronox Holdings PLC Ratings Lowered To ‘B’ On Weakened 2025 Expectations; Outlook Stable
Term of the Day: Samurai Bonds
Samurai bonds are yen-denominated bonds issued by foreign entities in Japan. These bonds, which are subject to bond market regulations in Japan, are issued by foreign countries and corporations to attract Japanese investors. Another reason to issue Samurai bonds is to capitalize on lower interest rates in Japan compared to the issuer’s local market.
Talking Heads
On India Seeing Asia’s Biggest Earnings Downgrades as US Tariffs Loom
Raisah Rasid, global market strategist at J.P. Morgan Asset Management
“We could potentially see the tariff triggering a broad valuation re-rating downwards and make some of the domestic oriented stocks attractive”
Rajat Agarwal, Asia equity strategist at Societe Generale
“After disappointing earnings growth of only 6% in 2024, the pace of recovery remains sluggish in 2025, as indicated by both the economic growth parameters and corporate earnings”
On Treasuries Appealing More Than European Bonds on Rates – Invesco
Alessio de Longis, Invesco
“Foreign central banks are more advanced in the easing cycle and we think the Federal Reserve has some room to lower rates…The outperformance of fixed income should come from additional evidence of a slowing economy into the rest of the year…The ECB’s reticence on cutting rates further “suggests an underweight position in European bonds”
On Default Warnings Start to Pile Up in Private Credit Market
Stephen Dulake, JPMorgan
“Inflows into the asset class meant too much capital was committed far too quickly…Underwriting corners were surely cut; and losses will be outsized come the downturn.”
Zain Bukhari, S&P
“A major selling point of private credit is the low default rates…This reputation hinges on a narrow definition of default.”
Michael Dimler, Morningstar
“Higher concentrations of borrowers in weaker credit rating categories and a recent uptick in defaults suggest ongoing headwinds”
Top Gainers and Losers- 22-Aug-25*
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