Weekly Market Update

10-YEAR TREASURY YIELD TOPS 3%

Thursday, May 10, 2018

U.S. government bond prices edged lower Tuesday after the Treasury Department's latest auction drew weak demand among investors. The yield on the benchmark 10-year Treasury note settled at 3.004% by end of business Wednesday, compared to Monday's 2.950%. The Treasury Department auctioned $31 billion in three-year notes at a yield of 2.664% on Tuesday, the latest in a series of auctions meant to help fund a growing federal budget deficit. Wednesday's auction of $25 billion in ten-year notes with 2.995% yield was the highest yield seen at auction since 2014. In addition to the increased supply, President Trump's announcement regarding the Iran nuclear deal may introduce uncertainty for treasuries. The decision caused oil prices to increase, given Iran's role as a leading crude exporter. Higher oil prices will strain the profits of large oil importers and may spur inflation, further pushing treasury yields up.

In Other News

  • The proposed partnership between Emory Healthcare and DeKalb Medical is expected to close in the next 100 days, the systems announced Tuesday. The Federal Trade Commission recently approved the deal, which kicked off with a letter of intent in November. The partnership would bring the two hospitals together under the Emory Healthcare system, and could be a lifeline for Dekalb Medical, which ran into some financial troubles last fiscal year.
  • The Los Angeles County Museum of Art and the Herberger Institute for Design and the Arts at Arizona State University are teaming up for a three-year program to help participants gain access to a broader range of professional fields within museums, such as curation and directing.
  • U.S. companies are carrying about $4 trillion in debt that needs to be refinanced over the next five years, according to a new analysis from Wells Fargo Securities. That's about two-thirds of all outstanding corporate debt, and some analysts are worried about what could happen to businesses if interest rates keep rising over that period.
  • Several pieces from the late David Rockefeller's art collection were sold for a record-breaking $646 million Tuesday night--making it the most valuable collection ever sold at auction. Over 1,000 art pieces remaining in the collection are estimated to be worth between $500 million and $1 billion the need to help students who are 75 percent of the way toward a degree but are at risk of dropping out. The study found that nearly one in five students who leave college without a degree complete 75 percent or more of the credit threshold for a degree before leaving; one in ten of those leaving school has reached at least 90 percent of the credit threshold.
  • U.S. producer prices barely rose in April after strong gains in the first quarter, held down by moderating costs of both goods and services, and possibly easing fears that inflation pressures were rapidly building. The Labor Department said on Wednesday its producer price index edged up 0.1% last month after increasing 0.3% in March.
  • Florida State University is just one of several universities that have cancelled their comprehensive subscriptions to bundled Elsevier journals, which can cost up to $1 million annually. Many of these institutions are electing to pay for only those journals they determine they need the most.

Rating Agency Update

  • Moody's downgraded Oklahoma Panhandle State University's rating from A3 to Baa1. The outlook is negative.
  • Moody's assigned A1 to Northern Michigan University's Series 2018A&B General Revenue Bonds. The outlook is stable.
  • Moody's assigned Aa3 to Georgia State University's Series 2018 Revenue Refunding Bonds. The outlook is stable.
  • S&P affirmed the University of Texas System Board of Regents' AAA rating. The outlook is stable.
  • S&P affirmed Hampden-Sydney College's A rating. The outlook is stable.
  • S&P affirmed Nicholls State University's BBB+ rating. The outlook is stable.
  • S&P assigned A+ to University of North Carolina at Greensboro's Series 2018 General Revenue Bonds. The outlook is stable.
  • S&P affirmed Neumann University's BBB rating. The outlook is stable.
  • S&P affirmed Rutgers University's A+ rating. The outlook is stable.
  • S&P affirmed Lycoming College's A rating. The outlook is revised from stable to negative.