The backup in treasury yields is getting some more press as investors worry about the impact of higher mortgage rates on the embryonic housing recovery.
Despite the comment above, Microsoft has decided that rates are low enough and spreads tight enough to bring it's first ever debt deal to market this morning. Demand is very strong for this AAA rated entity; expect ~125bps for the 10 year tranche. SPG, USB and InBev are also in the market.
As I've noted before, the appetite for risk is back....such that it was the WSJ's lead article this morning. In the last week, single A rated bonds tightened ~14bps while BBB bonds tightened ~66bps during that same time frame. It's also notable that credit curves steepened 4bps over the last week; that is a very large move and certainly welcome (you can remember why here).
One of the reasons that the new issue market had been doing so well is that deals were coming at large spread concessions (i.e. more spread) to existing deals. This hurt existing deals as they then widened/cheapened accordingly to be in line with the new deal. JPMorgan notes in recent research that this 'new issue concession' has shrunk to pre-crisis levels. This will diminish the attractiveness of new deals at the margin but could lend support to existing secondary bonds.
There has been a lot of noise recently that the dealers still dominate and control the CDS market despite some tepid efforts to broaden the participation (of the buyside). This article makes a strong case for the potential of conflict of interest.
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