EU CONSUMER CYCLICALS: VF Corp; Q3 (to Dec) results (x2)
Jan-29 13:20
(VFC: Ba1/BB)
- We see little reason for the Mar-€26s to be left this wide - cash on hand already covers the remaining 25 maturity ($750m line).
- The €28/29s (-5 today) may screen value to some - we are a tad uneasy given co has once again left guidance for the next quarter lacklustre and Vans is still falling (across all regions, at a similar pace ex US where signs of slowing falls - could be macro). Note in 2020 it was 40% of group sales (YTD 25%). Sun Choe was lifted from lululemon in May to fix the brand - we may yet see her impact.
- We see leverage approaching low 4-handle (net, excluding leases in EBITDA). Headroom to current ratings but not enough for any upgrades from the raters (our view).
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US TSY FUTURES: Extending Highs
Dec-30 13:13
- Treasury futures continue to march higher, mirroring support in EGBs (see 0754ET bullet), otherwise no substantive headline or Block driver.
- Tsy Mar'25 10Y contract trades 108-25 last (+11) puts it back to last Monday's early range, 10y yield declining .0545 at 4.5709%.
- Curves remain mixed, 2s10s -.050 at 28.792, 5s30s +1.967 at 37.374.
STIR: Repo Reference Rates
Dec-30 13:07
- Secured Overnight Financing Rate (SOFR): 4.46% (-0.07), volume: $2.275T
- Broad General Collateral Rate (BGCR): 4.45% (-0.05), volume: $840B
- Tri-Party General Collateral Rate (TGCR): 4.45% (-0.05), volume: $803B
- (rate, volume levels reflect prior session)
EQUITIES: Futures Through the Friday Lows as Megacaps Underperform Pre-Market
Dec-30 12:59
US futures now through the Friday lows as volumes and participation pick up at the NY crossover. Move lower for stocks is coming alongside a fresh daily low in the US 10yr yield - this is the inverse of the price action we noted into the Friday close, which saw the e-mini S&P drop ~80 points as the US 10y yield added ~5bps.
- An early underperformer amid single stocks had been Boeing - which traded lower by as much as 9% in pre-market trade this morning - but has since trimmed the losses to around 2%. Megacap names are underperforming ahead of the bell (as had been the case last week): Tesla lower by 1.9%, NVidia -0.9%, Apple -0.8%, Meta -0.8%.
- Today's marks one of the last full session of the year for equity markets - so rebalancing flows could prove dominant, estimates of which vary but some notable names see over $20bln of US equities to be sold from US pension funds in order to rebalance against the December price action - a sizeable flow when compared to historicals.
