October saw strong equity market performance globally, accompanied by a rally in global risk-free rates. The S&P 500 gained 2.3%, while the Nasdaq rose 4.8%. In Europe, major indices also finished higher, with the Eurostox 50 up 2.5% and the FTSE100 advancing 4.1%. Gold ended the month up 3.7% at $4,000, though this remained about 10% below intra-month highs of $4,400. Equity gains were led by technology stocks, with the tech component of the S&P 500 up 6.2% for the month.
Fixed income markets ended the month on a softer tone, after a strong rally in the first three weeks. Concerns over a weakening US labour market, coupled with the ongoing shutdown of the US Federal Government, were to the fore early in the month. On 22nd October, the US 10-year yield reached a low of 3.94%; subsequently closing the month at 4.08%, still 7bps richer than 30th September levels. Credit markets were mixed, European IG credit spreads tighter by 2bps to 75bps whereas US IG credit spreads finished the month 5bps wider at 78bps.
The US saw $161bn of USD investment-grade issuance in October — the busiest October in over a decade — bringing YTD supply to $1.51trn, according to Bank of America. Financials represented 36% of total supply, below the YTD average of 47%. Following mid-month earnings, Goldman Sachs, JPMorgan, and Morgan Stanley each issued new USD benchmark deals.
The standout transaction came from Meta, which launched a $30bn multi-tranche deal. According to Bloomberg, “Meta’s ~$125bn peak order book was the largest on record, surpassing CVS’s $120bn for its $40bn Aetna acquisition in 2018.” This was also the largest corporate bond issue since Pfizer’s $31bn Seagen acquisition financing in May 2023. Demand was strong, with each tranche around 4x oversubscribed. The fund participated in the 5Y, 10Y, 30Y, and 40Y tranches. The bonds were volatile on the break, moving up to 4bps intraday, and ended slightly tighter: the 5Y, 30Y, and 40Y closed around RO–0.5bp, and the 10Y around RO–2bp.
In contrast, European primary issuance was subdued, totalling just €53.9bn, including €24.3bn from financials. The slowdown reflected front-loaded issuance in September and blackout periods ahead of earnings for many banks. After results, reverse Yankee issuance resumed as Citi, Bank of America, and JPMorgan took advantage of the favourable cross-currency basis. Among European banks, Barclays issued €1.25bn of 11NC10 HoldCo debt late in the month, attracting 4.2x covered books
European corporate supply was minimal, with Procter & Gamble’s dual-tranche 8-year and 20-year issue being the only notable deal. In the sovereign, supranational, and agency (SSA) sector, the European Union tapped an existing 7-year bond and issued a new 15-year line, together raising €11bn.
