The US corporate bond market is gearing up for a busy September, despite lower odds of a rate cut. This comes as investors continue to navigate the economic impact of the ongoing COVID-19 pandemic.
According to data from Refinitiv, September is expected to see a surge in corporate bond issuance, with estimates ranging from $120 billion to $140 billion. This is a significant increase from the $100 billion issued in August.
The Federal Reserve’s decision to keep interest rates near zero has played a major role in this trend. With borrowing costs remaining low, companies are taking advantage of the opportunity to raise capital through bond offerings.
However, the odds of a rate cut in September have decreased, with the CME Group’s FedWatch Tool showing a 93.5% chance of rates staying unchanged. This is a shift from earlier this month when the odds were at 100%.
Despite this, market experts believe that the corporate bond market will remain active. The demand for high-quality bonds is expected to remain strong, as investors seek safe havens amid the uncertainty caused by the pandemic.
In addition, the upcoming US presidential election and ongoing trade tensions with China are also factors that could impact the corporate bond market in the coming months.
Overall, while the odds of a rate cut may have decreased, the US corporate bond market is still expected to see a busy September. Investors will be closely watching the market for any developments and adjusting their strategies accordingly.
