Banks flood US debt market in biggest single-day raise since 2016, BMO says

Published On Nov 13, 2024, 5:18 PM

Banks issued $23.5 billion in investment-grade bonds, marking the largest single-day issuance since 2016. These issuances represent 78% of the total $30.15 billion in high-grade bond sales for the day. The move is likely in anticipation of rising interest rates in the next year following the presidential election. HSBC led the issuance with $6.5 billion in bonds, while several other major banks also participated. The demand for these bonds was strong, exceeding three times the volume offered.

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The significant influx of bond issuance indicates banks are preparing for potential interest hikes, likely a response to economic signals indicating a tightening monetary policy. This could point to a cautious yet strategic outlook where banks are locking in current rates before they potentially rise. From an investment perspective, this could negatively impact bond prices, leading investors to consider related equities that benefit from rising interest rates, such as financial services firms.

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