U.S. News

Consumer Sentiment

• Republican consumer sentiment surged over 15 points in November, while Democratic sentiment fell by more than 10 points after the elections
• The overall consumer sentiment index increased from 70.5 in October to 71.8 in November, although it remained higher for Democrats (81.3) compared to Republicans (69.1)
• Expectations regarding inflation have worsened, with consumers anticipating an average price increase of 3.2% over the next five years, the highest projection in a year

Leading Economic Index

• U.S. Leading Economic Index declined by 0.4% in October 2024, marking a 2.2% decline over the past six months, primarily due to weak new orders, decreased manufacturing hours, & rising unemployment insurance claims
• Coincident Economic Index, reflecting current economic conditions, remained unchanged for the second consecutive month at 112.8, with gains in personal income and trade sales offset by declines in industrial production
• Lagging Economic Index decreased by 0.1% in October, with a six-month growth rate turning negative at -0.8%, indicating continued economic challenges ahead

Existing Home Sales

• Existing-home sales rose 3.4% in October to an annual rate of 3.96 million, marking the first year-over-year increase (2.9%) since July 2021
• Median price hit $407,200, a 4% year-over-year rise and record for October
• Inventory grew 19%, with a 4.2-month supply and 29 days average on market

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S.,
  decreased to 213,000 in the week ended November 15, down 6,000 from the prior week
• The four-week moving average was 217,000, down 3,750 from the prior week
• Continuing claims – those filed by workers unemployed for longer than a week – increased by 36,000 to 1.908 million in the week ended November 8. This figure is reported with a one-week lag



Fed’s Balance Sheet

• The Federal Reserve’s assets totaled $6.924 trillion in the week ended November 22, down $43.4 billion from the prior week
• Treasury holdings totaled $4.325 trillion, down $14.7 billion from the prior week
• Holdings of mortgage-backed securities (MBS) were $2.27 trillion in the week, down $0.6 billion from the prior week



Total Public Debt

• Total public debt outstanding was $36.03 trillion as of November 22, an increase of 6.7% from the previous year
• Debt held by the public was $28.69 trillion, and intragovernmental holdings were $7.38 trillion



Inflation Factors

CPI:

• The consumer-price index rose 2.6% in October year over year
• On a monthly basis, the CPI increased 0.2% in October on a seasonally adjusted basis, after increasing 0.2% in September
• The index for all items less food and energy (core CPI) rose 0.3% in October, after rising 0.3% in September
• Core CPI increased 3.3% for the 12 months ending October

Food and Beverages:

• The food at home index increased 1.1% in October from the same month a year earlier, and increased 0.1% in October month over month
• The food away from home index increased 3.8% in October from the same month a year earlier, and increased 0.2% in October month over month

Commodities:

• The energy commodities index decreased (1.0%) in October after decreasing (4.0%) in
• The energy commodities index fell (12.4%) over the last 12 months
• The energy services index (0.4%) in October after increasing 0.4% in September
• The energy services index rose 4.0% over the last 12 months
• The gasoline index rose (12.2%) over the last 12 months
• The fuel oil index fell (20.8%) over the last 12 months
• The index for electricity rose 4.5% over the last 12 months
• The index for natural gas fell 2.0% over the last 12 months

Supply Chain:

• Drewry’s composite World Container Index decreased to $3,412.89 per 40ft container
• Drewry’s composite World Container Index has increased by 146.5% over the last 12 months

Housing Market:

• The shelter index increased 0.4% in October after increasing 0.2% in September
• The rent index increased 0.4% in October after increasing 0.2% in September
• The index for lodging away from home decreased (3.4%) in October after decreasing (3.8%) in September

Federal Funds Rate

• The effective Federal Funds Rate is at 4.58%, down (0.75%) year to date

World News

• Middle East

  • The International Criminal Court (ICC) issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu and former Defense Minister Yoav Gallant, alleging war crimes and crimes against humanity during the Gaza offensive
  • The ICC’s decision may significantly affect Israel’s international relations, as 124 member countries of the ICC are technically obligated to enforce the arrest warrants, potentially restricting Netanyahu’s travel and increasing Israel’s isolation
  • A U.N. atomic agency resolution censured Iran over its nuclear activities, prompting Tehran to announce plans to launch more advanced centrifuges, potentially increasing its nuclear fuel-making capacity
  • U.S. special envoy Amos Hochstein reported progress in negotiations for a cease-fire between Israel and Hezbollah, with key sticking points including Hezbollah’s compliance and Israel’s demand to strike in self-defense

• Russia

  • A high-ranking North Korean general deployed in Russia’s Kursk region was wounded in a Ukrainian missile strike, marking the first confirmed casualty of a North Korean officer in the Russia-Ukraine conflict
  • The U.S. imposed sanctions on Gazprombank, Russia’s third-largest bank, for facilitating military payments and supporting Russia’s war efforts in Ukraine, with payments in dollars to the bank required to cease by December 20
  • Ukraine used U.S.-provided ATACMS long-range missiles for the first time to strike an ammunition depot in Russia’s Bryansk region, escalating the conflict and drawing Russian threats of retaliation
  • Miami-based investor Stephen P. Lynch seeks U.S. approval to bid on the Nord Stream 2 pipeline in a Swiss bankruptcy process, proposing American ownership as a strategic geopolitical asset

• China

  • A Hong Kong court sentenced 47 pro-democracy activists, including Benny Tai, with prison terms of up to 10 years under the national-security law for an electoral plan
  • China and Brazil signed 37 agreements during Xi Jinping’s visit, covering trade, infrastructure, and technology collaboration, emphasizing shared goals of reducing reliance on the U.S.
  • A wave of violent attacks in China has killed dozens, leading authorities to censor discussions and restrict public mourning. Police removed flowers and videos related to incidents to avoid unrest
  • Beijing has launched a campaign to reduce excessive bureaucracy, including fewer meetings, less paperwork, and streamlined performance reviews, to allow local officials to focus on real work

• Argentina

  • Argentine President Javier Milei seeks U.S. support under President-elect Trump to secure new IMF loans for his aggressive capitalist reforms, including austerity measures to combat inflation and stabilize the economy, while aligning with Trump’s political ideology despite diverging on trade and global economic policies

• Canada

  • Canada’s Liberal government, supported by the New Democratic Party, plans to temporarily remove the 5% goods-and-services tax on select items like home heating and diapers to ease affordability challenges amid public dissatisfaction with rising costs and slow economic growth

• North Korea

  • North Korean leader Kim Jong Un dismissed the idea of resuming nuclear talks with President-elect Donald Trump, citing the U.S.’s “unchanging hostile policy” and emphasizing strengthened ties with Russia and expanded nuclear capabilities

• UK

  • U.K. inflation rose to 2.3% in October 2024, exceeding the Bank of England’s 2% target, driven by energy price increases, with core inflation at 3.3%; policymakers plan gradual rate cuts despite lingering inflationary pressures and economic growth concerns

• Japan

  • Japan’s government approved a $141 billion stimulus package to address rising living costs, promote innovation in AI and chip supply chains, and provide inflation relief through cash handouts and energy subsidies, though concerns over public debt and fiscal sustainability remain

• Brazil

  • Brazilian police have accused former President Jair Bolsonaro and 36 allies of plotting a coup to prevent President Luiz Inácio Lula da Silva from taking office in 2023, including plans to assassinate Lula and his vice president, revealing a highly organized operation involving military and political figures

• Pakistan

  • Pakistan’s government has introduced controversial legal changes to consolidate power, including extending the army chief’s term, limiting judicial independence, and enabling detentions without crime, amid political instability and opposition protests over jailed leader Imran Khan

• France

  • After Israeli fans were targeted in Amsterdam, France is deploying 4,000 police, including elite tactical officers, and 1,600 private security guards ahead of Thursday’s France-Israel soccer match just outside Paris

Commodities

• Oil Prices

  • WTI: $71.24 per barrel
    • 6.30% WoW; (0.57%) YTD; (7.60%) YoY
  • Brent: $75.15 per barrel
    • 5.79% WoW; (2.45%) YTD; (8.31%) YoY

• US Production

  • U.S. oil production amounted to 13.2 million bpd for the week ended November 15, down 0.3 million bpd from the prior week

• Rig Count

  • The total number of oil rigs amounted to 583, down 1 from last week

• Inventories

  • Crude Oil

    • Total U.S. crude oil inventories now amount to 430.3 million barrels, down (4.0%) YoY
    • Refiners operated at a capacity utilization rate of 90.2% for the week, down from 91.4% in the prior week
    • U.S. crude oil imports now amount to 6.509 million barrels per day, down 17.7% YoY

  • Gasoline

    • Retail average regular gasoline prices amounted to $3.06 per gallon in the week of November 22, down (6.3%) YoY
      • Gasoline prices on the East Coast amounted to $3.11, down (5.0%) YoY
      • Gasoline prices in the Midwest amounted to $2.96, down (7.5%) YoY
      • Gasoline prices on the Gulf Coast amounted to $2.73, down (5.2%) YoY
      • Gasoline prices in the Rocky Mountain region amounted to $3.04, down (8.2%) YoY
      • Gasoline prices on the West Coast amounted to $4.01, down (11.9%)
    • Motor gasoline inventories were up by 2.1 million barrels from the prior week
    • Motor gasoline inventories amounted to 208.9 million barrels, down (3.5%)
    • Production of motor gasoline averaged 9.29 million bpd, down (0.9%) YoY
    • Demand for motor gasoline amounted to 8.419 million bpd, down (0.7%) YoY

  • Distillates

    • Distillate inventories decreased by -0.1 million in the week of November 22
    • Total distillate inventories amounted to 114.3 million barrels, up 8.3% YoY
    • Distillate production averaged 4.837 million bpd, down (2.0%) YoY
    • Demand for distillates averaged 3.775 million bpd in the week, down (8.2%)

  • Natural Gas

    • Natural gas inventories decreased by 3 billion cubic feet last week
    • Total natural gas inventories now amount to 3,969 billion cubic feet, up 3.7% YoY

    

Credit News

High yield bond yields unchanged at 7.18% and spreads decreased 1bps to 287bps. Leveraged loan yields decreased 1bps to 8.63% and spreads decreased 3bps to 462bps. WTD Leveraged loan returns were positive 22bps. WTD high yield bond returns were positive 13bps. 10yr treasury yields increased 1bps to 4.43%. HY spreads decreased amid limited macro developments and a mild uptick in issuance. Leveraged loan witnessed the largest stretch of inflows since February 2022 and a surge in repricing activity.

High-yield:

Week ended 11/22/2024

• 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 11/22/2024

• 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: Spirit Airlines ($1.6bn, 11/18/24), Franchise Group Inc ($1.1bn, 11/3/24), Exactech ($254mn, 10/29/24), American Tire Distributors ($975mn, 10/23/24), Accuride ($291mn, 10/11/2024), Mavenir Systems ($712mn, 9/27/24), Digital Media Solutions ($208mn, 9/12/24), 2U ($374mn, 7/25/24), Rodan & Fields ($763mn, 7/11/24), Wheel Pros ($2.8bn, 7/11/24), and Quorum Health Group ($688mn, 7/10/24).

CLOs:

Week ended 11/22/2024

• 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: U.S. Large Cap M&A Valuations (EV/EBITDA

Diagram R: Dry Powder for All Private Equity Buyouts

Diagram S: Structured Credit Spreads

Diagram T: Structured Credit Yield

Diagram U: SOFR CURVE

Diagram V: CMBS Spreads

Freight Rates

Drewry World Container Index

China-Global & Shanghai Export Container Freight Index

ZCGC RE Research

The weekly measure of mortgage applications to purchase a home has been near the historic lows over the past six weeks, including in the latest reporting week, down by 50% from the same period in 2019, according to data from the Mortgage Bankers Association

The average 30-year fixed mortgage rate rose to 6.84%, according to Freddie Mac’s weekly measure

Since early October, Freddie Mac’s measure of mortgage rates has at first ticked up and then surged by 76 basis points, thereby undoing part of the rate-cut mania plunge that kicked off a year ago.

But these higher rates in October haven’t been reflected in the closed-sales figures in October, as those deals were made in prior weeks or months. But they are reflected in the mortgage applications, see above.