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Is it the $TELL?

The bond rout today is a real problem.

US 10-year yields extended the rise to 9 basis points, hitting 3.58%. The likely trigger today was the terrible PPI report in Germany at 45.8% vs. 37.1% expected YoY. This increases the risk that the ECB will have to drag the bloc into a brutal recession.

Where the rubber really meets the bond road isn’t in pensions replacing equities with fixed-income allowances (although that’s certainly happening, as BofA reported today), it This is a slowdown in business activity.

The junk bond market seems to be freezing. Today, Tellurian ($TELL) withdrew a proposed bond issue. These were 11.25% 5-year notes offered alongside warrants. The company did not provide an explanation, but it is an LNG exporter and it may be the hottest spot in the world right now. If they can’t fundraise, who can?

That’s not to say the company isn’t in trouble, investors have cried bad governance, and a factory would cost $11 billion.

At the same time, unwanted spreads do not explode wider. They tightened yesterday and over the past 10 days, but new deals are hard to fund. Citrix’s $16.5 billion LBO will be expensive. IFR reports that previous talks were 8.5-9%, but have moved to 9.5-9.75% and this is due to today’s price.

This is a market crying out for help from the Fed and if Powell doesn’t offer any help, that might just be the start.

This article was written by Adam Button on


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