A post-Labor Day corporate debt binge revives the selloff of US Treasury Bonds.

Fresh pressure was put on long-end U.S. Treasuries after Labor Day when a flurry of investment-grade-rated U.S. corporations issued bonds, tempting some buyers to forego government bonds in favor of highly-rated corporate paper with yields that were higher.

Information from the International Financing Review (IFR) indicates that at least 21 offerings of investment-grade rated bonds are anticipated to be priced on Tuesday.

Investors informed Reuters that they plan to issue between $100 billion and $150 billion in new bonds this month.

According to ICE BAML data, as of Monday, the average yield on U.S. investment-grade bonds was 5.73%. This compares to 5.47% at the beginning of the year and 2.44% in January 2022, when the Fed started raising rates to fight inflation.

According to Gennadiy Goldberg, head of U.S. rates strategy at TD Securities USA, “September tends to be a very heavy supply month, so people will sell Treasuries and existing credit to make room for new issuance.”

The yield on ten-year Treasury bonds was last seen rising nine basis points from Friday’s market close to 4.27% from 4.180%, while the yield on thirty-year Treasury bonds increased by the same nine basis points to 4.38% from 4.285% on Friday.

Since the U.S. economy has shown itself to be remarkably resilient to higher interest rates, investors have priced in the prospect that interest rates may remain higher for longer than expected, which has resulted in a jump in long-term Treasury yields, which move inversely to prices, for the majority of the last few months.

There have been additional factors that have contributed to the selloff, such as an increase in the supply of government bonds and growing concerns about the sustainability of US debt, as Fitch’s downgrading of US debt last month demonstrates.

Last week, yields decreased, but on Friday, they began to rise once more.

Considering that the Federal Reserve is widely anticipated to maintain its current rate of interest at its upcoming rate-setting meeting later this month, the supply of corporate bonds was perceived as a factor driving up yields in the upcoming weeks.

Tom di Galoma, managing director and co-head of global rates trading at BTIG, stated, “I don’t necessarily think (the Fed) has any more rate moves or rate tightenings left.”

“At the moment, supply is the only factor that matters, and I believe that’s driving up yields,” he stated.

Based on the average issuance volume of $129 billion over the past four years outside of 2020, credit research analysts at JPMorgan Chase (JPM.N) said that September is usually the second busiest month for U.S. debt issuance.

Tuesday’s trades included three-part senior notes from tobacco major Philip Morris International (PM.N), a five-part note offering from manufacturer Volkswagen (VOWG_p.DE), and a two-part senior unsecured note offering from Unilever Capital Corp. (ULVR.L).

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