U.S. News

U.S. Trade Deficit

• The U.S. trade deficit climbed 5% in September to $61.5 billion but remained near a three-year low and was on track for the smallest increase since 2020
• Imports rose 2.7% to $322.7 billion, the highest level since February, reflecting U.S. companies stocking up ahead of the holiday season
• Exports moved up a smaller 2.2% last month to $261.1 billion, with a weaker global economy curbing demand for many U.S. goods

Credit Card Debt

• Credit card balances increased to $1.08 trillion according to the Federal Reserve, up $154 billion year over year and the largest increase since 1999
• The average balance per consumer hit $6,088, the highest in 10 years
• The average annual percentage rate on credit card debt is now more than 20%, also an all-time high

Consumer Sentiment

• Consumer sentiment dropped to 60.4 in November from 63.8 in October, declining for the fourth straight month
• Consumer expectations for long-run inflation ticket up to 4.4%, a level not seen since 2011
• Gas price expectations, both over the short and long run, rose to their highest readings this year

Jobless Claim

• Initial jobless claims, a measure of how many workers were laid off across the U.S., decreased to 217,000 in
  the week ended November 3, down 3,000 from the prior week
• The four-week moving average was 212,000, up 1500 from the prior week
• Continuing claims – those filed by workers unemployed for longer than a week – increased by 22,000 to 1.834
  million in the week ended October 27 . This figure is reported with a one-week lag



Fed’s Balance Sheet

• The Federal Reserve’s assets totaled $7.861 trillion in the week ended November 10, down $6.0 billion from
  the prior week
• Treasury holdings totaled $4.873 trillion, down $27.3 billion from the prior week
• Holdings of mortgage-backed securities (MBS) were $2.46 trillion in the week, down $11.7 billion from the
  prior week



Total Public Debt

• Total public debt outstanding was $33.70 trillion as of November 10, an increase of 7.8% from the previous
  year
• Debt held by the public was $26.58 trillion, and intragovernmental holdings were $7.12 trillion



Inflation Factors

CPI:

• The consumer-price index rose 3.7% in September year over year
• On a monthly basis, the CPI increased 0.4% in September on a seasonally adjusted basis, after increasing
  0.6% in August
• The index for all items less food and energy (core CPI) rose 0.3% in September, after rising 0.3% in
  August
• Core CPI increased 4.1% for the 12 months ending September

Food and Beverages:

• The food at home index increased 2.4% in September from the same month a year earlier, and increased
  0.1% in September month over month
• The food away from home index increased 6.0% in September from the same month a year earlier, and
  increased 0.4% in September month over month

Commodities:

• The energy commodities index increased 2.3% in September after increasing
• The energy commodities index rose 2.2% over the last 12 months
• The energy services index 0.1% in September after increasing 0.3% in August
• The energy services index fell (3.3%) over the last 12 months
• The gasoline index rose 3.0% over the last 12 months
• The fuel oil index fell (5.1%) over the last 12 months
• The index for electricity rose 2.6% over the last 12 months
• The index for natural gas fell (19.9%) over the last 12 months

Supply Chain:

• Drewry’s composite World Container Index increased to $1,503.64 per 40ft container
• Drewry’s composite World Container Index has decreased by (45.8%) over the last 12 months

Housing Market:

• The shelter index increased 0.6% in September after increasing 0.3% in August
• The rent index increased 0.6% in September after increasing 0.3% in August
• The index for lodging away from home increased 0.7% in September after decreasing (4.7%) in August

World News

• Israel/Middle East

  • Israeli ground forces have fought their way into northern Gaza’s urban areas and are preparing to enter Gaza city
  • The Israeli soldiers have established a temporary humanitarian corridor stretching from Northern Gaza to the south
  • Israel is under international pressure to prevent civilian deaths and ease worsening humanitarian conditions – pressure that could force a halt to the war before Israel achieves its objective of rooting out Hamas from Gaza
  • According to health authorities in Gaza, the war has killed over 11,000 people in Gaza. The figures don’t distinguish civilians and combatants. Israeli officials say several thousand militants are among the dead, including a Hamas brigade commander
  • Iran’s president joined dozens of Arab and Muslim leaders at a summit in Saudi Arabia over the weekend. It was Iran’s first visit to Saudi Arabia in more than 15 years. The summit’s purpose was to project a unified opposition to Israel’s military operations in Gaza

• Ukraine

  • On Wednesday, top European Union officials recommended that Ukraine be invited to begin membership talks early next year. Ukraine will need to enact certain anti-corruption reforms before proceeding with negotiations

• Russia

  • The U.K. government has sanctioned 29 Russian entities and individuals operating in and supporting Russia’s gold and oil sector in an effort to cut off revenue streams funding its war in Ukraine
  • The U.K. government said gold was a significant income stream for Russia and added $15.5 billion to the Russian economy in 2021

• China

  • China’s exports fell for the sixth straight month, adding pressure to boost spending at home. Chinese exports fell to 6.4% in October compared to a year earlier, a steeper decline than the 6.2% decrease in September
  • China Vanke, one of the oldest and largest real estate companies in China, is the latest Chinese developer to fall victim to a market selloff, and investors are worrying about its liquidity
  • Bid prices for its bonds that come due in 2029 have fallen from 80 cents in August to below 40 cents in November

• Pakistan

  • Pakistan has started rounding up tens of thousands of undocumented Afghans for deportation back to the country they fled, prompting fears that some awaiting resettlement to the U.S. could be swept up

• India

  • Apple notified a number of Indian opposition lawmakers this week that their phones were likely targets of state-sponsored attackers, prompting several of the individuals to express concern about the possible use of surveillance by the government of Prime Minister Narendra Modi

• Italy

  • In recent months, more than a thousand minor earthquakes have rattled the area around the Campi Flegrei volcano in southern Italy, stoking fears that it may soon erupt again after nearly five centuries

• Finland

  • Finland said that a Chinese ship’s anchor likely caused a mysterious rupture of an undersea gas pipeline in the Baltic Sea last month. The finding has raised concerns about the vulnerability of European infrastructure to sabotage amid mounting tensions between Russia and the West

• Guatemala

  • Widespread political protests in Guatemala have engulfed Central America’s most populous nation, with demonstrators closing roads, choking exports and causing shortages of fuel and food

• Ecuador

  • Ecuadoreans elected Daniel Noboa as president over a left-leaning lawmaker in the hope he will jump-start a slow-growing economy and reduce drug-fueled violence that has buffeted the small South American country

Commodities

• Oil Prices

  • WTI: $77.28 per barrel
    • (4.01%) WoW; (2.87%) YTD; (10.63%)YoY
  • Brent: $81.56 per barrel
    • (3.92%) WoW; (2.81%) YTD; (12.93%)YoY

• US Production

  • U.S. oil production amounted to 13.2 million bpd for the week ended November 3, up 0.0 million bpd from the prior week

• Rig Count

  • The total number of oil rigs amounted to 616, down 2 from last week

• Inventories

  • Crude Oil

    • Total U.S. crude oil inventories now amount to 421.9 million barrels, down (4.3%) YoY
    • Refiners operated at a capacity utilization rate of 85.4% for the week, down from 85.4% in the prior week
    • U.S. crude oil imports now amount to 6.425 million barrels per day, down (0.4%) YoY

  • Gasoline

    • Retail average regular gasoline prices amounted to $3.39 per gallon in the week of November 10, down (10.6%) YoY
      • Gasoline prices on the East Coast amounted to $3.36,down (8.9%) YoY
      • Gasoline prices in the Midwest amounted to $3.28, down (14.7%) YoY
      • Gasoline prices on the Gulf Coast amounted to $2.96, down (9.4%) YoY
      • Gasoline prices in the Rocky Mountain region amounted to $3.57, down (7.7%) YoY
      • Gasoline prices on the West Coast amounted to $4.73, down (6.6%) YoY
    • Motor gasoline inventories were up by 17.8 million barrels from the prior
    • Motor gasoline inventories amounted to 223.5 million barrels, up 8.6%
    • Production of motor gasoline averaged 9.49 million bpd, down (2.7%) YoY
    • Demand for motor gasoline amounted to 8.697 million bpd, down (3.5%) YoY

  • Distillates

    • Distillate inventories decreased by -5.0 million in the week of November 10
    • Total distillate inventories amounted to 111.3 million barrels, up 4.7% YoY
    • Distillate production averaged 4.580 million bpd, down (12.0%) YoY
    • Demand for distillates averaged 3.682 million bpd in the week, down (11.5%) YoY

  • Natural Gas

    • • Natural gas inventories decreased by 199 billion cubic feet last week
      • Total natural gas inventories now amount to 3,779 billion cubic feet, up 5.6% YoY

    

Credit News

High yield bond yields decreased 18bps to 8.87% and spreads tightened 20bps to 410bps. Leveraged loan yields decreased 15bps to 10.11% and spreads tightened 11bps to 563bps. WTD Leveraged loan returns were positive 46bps. WTD high yield bond returns were positive 80bps. Credit markets continued last week’s rally with significant inflows recorded in both loans and bonds. The inflow into high yields bonds was the fourth largest on record, and the largest seen since 2020.

High-yield:

Week ended 11/10/2023

• Yields & Spreads¹
  
• Pricing & Returns¹
  
• Fund Flows²
  
• New Issue²
  
• Distressed Level (trading in excess of 1,000 bps)²
  
• Total HY Defaults
  

¹ Source: Credit Suisse High Yield and Leveraged Loan Index
² Source: JP Morgan

Leveraged loans:

Week ended 11/10/2023

• Yields & Spreads¹
  
• Leveraged Loan Index¹
  
• Fund Flows²
  
• New Issue²
  
• Distressed Level (loan price below $80)¹
  
• Total Loan Defaults
  

Default activity:

• Most recent defaults include: Air Methods ($1.7bn, 10/24/23), WeWork ($1.6bn, 10/15/23), Rite Aid ($3.0bn 10/16/23), Mallinckrodt ($2.8bn 8/28/23), Yellow Corp ($485mm 8/8/23), Anchor Glass ($675mm 7/11/23), Instant Brands ($391mm 6/12/23), Cyxtera Technologies ($768mm 6/4/23), Diebold ($2.0bn 6/1/23), Envision Health ($7.7bn 5/14/23), Venator Materials ($1.1bn 5/12/23), Bed Bath & Beyond ($5.2bn 4/22/23), David’s Bridal ($254mn 4/17/23), Monitronics International ($794mm 4/15/23), Catalina ($222mn 3/29/23), Diamond Sports ($8.6bn, 2/15/23), Avaya ($2.9bn, 2/14/23), Heritage Power ($485mn, 1/24/23), Serta Simmons Bedding($1.9bn, 1/23/23), Party City Holdings ($1.0bn, 01/17/23), Exela Intermediate ($1.4bn, 1/15/23)

CLOs:

Week ended 11/10/2023

• New U.S. CLO Issuance²
  
• New U.S. CLO Issuance²
  

Note:High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index
² Source: JP Morgan

Ratings activity:

• S&P and Moody’s High Yield Ratings
  

Appendix:

Diagram A: Leveraged Loan Trading Levels

Source: Credit Suisse Leveraged Loan Index

Diagram B: High Yield and Leveraged Loan LTM Price

Diagram C: Leveraged Loan and High Yield Returns

Diagram J: Leveraged Loan Defaults by Sector – Full Year

Diagram L: CLO Economics

Diagram N: Developed Country GovBond Yields (%)

Diagram O: S&P 500 Historical Multiples

Diagram P: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Diagram Q: Dry Powder for All Private Equity Buyouts

Diagram R: Structured Credit Spreads

Diagram S: Structured Credit Yield

Diagram T: CAT Bonds – Cumulative Returns

Freight Rates

Drewry World Container Index

China-Global & Shanghai Export Container Freight Index