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Bond Market News
PPI and Retail Sales Rise
October 16, 2026
US Treasury yield curve flattened with the 2Y rising by 5bp and longer-end yields easing by 2–3bp. On the data front, Headline PPI rose 6.3% YoY compared to expectations of 5.4%, while core PPI rose 5.0% vs. estimates of 4.4%. Retail sales for the month of September came in at 0.8%, higher than estimates of 0.3% but lower than previous month’s 1.3% print. Initial jobless claims for last week came in at 199k, slightly below estimates of 200k. Fed Chair Kevin Warsh announced that the Fed’s task force on productivity and jobs will hold a field hearing on November 16, focusing on the economic impact of AI and other productivity-related issues. Warsh had established five such task forces in June, which are expected to deliver their recommendations by end of this year.
Looking at equity markets, the S&P and Nasdaq ended higher by 0.3% and 0.1% respectively. US IG CDS spreads ended flat while HY CDS spreads tightened by 3.1bp. European equities ended mixed. European IG CDS spreads widened by 0.9bp, and Crossover spreads were 3.9bp wider. Asian equity markets have opened higher this morning. Asia ex-Japan CDS spreads widened by 3.5bp.
China Cinda raised $400mn via a 3.5Y FRN at SOFR+87bp, 53bp inside initial guidance of SOFR+140bp area. The senior unsecured note is rated BBB+ (S&P) and guaranteed by China Cinda HK Holdings Co Ltd. Proceeds will be used to repay existing indebtedness in accordance with applicable laws and NDRC registration documents.
Rating Changes
- Fitch Upgrades The Allstate Corporation’s Ratings; Outlook Stable
- Cogent Communications Group LLC Downgraded To ‘CCC+’ From ‘B-‘ On Increased Refinancing Risk; Outlook Negative
- Fitch Downgrades TalkTalk to ‘D’; Withdraws Ratings
- Prudential Financial’s Holding Co. Outlook Revised To Negative On Japanese Business Suspension Order; Ratings Affirmed
- Fitch Revises Equinix’s Outlook to Positive; Affirms IDR at ‘BBB+’
- Moody’s Ratings changes NIKE’s outlook to negative; affirms A2
Term of the Day: Trigger (for AT1s)
Triggers are an important feature of AT1s bonds and define when the loss absorption mechanism is activated. Triggers can either be mechanical or discretionary. Mechanical triggers are numerically defined and most commonly refer to the bank’s capital ratio level. Discretionary triggers, also known as point of non-viability (PONV) triggers are based on supervisors’ judgement of the bank’s solvency position. On occurrence of a trigger event, a AT1’s loss absorption mechanism kicks in, which may include a conversion to equity or a principal write-down, both of which boost the bank’s capital position.
Talking Heads
On Wall Street on Alert for Bessent to Act on Bond Yields Again – Vishal Khanduja, Morgan Stanley
“You’ve announced to the market that these yield levels are problematic,… That’s why we believe that the next two refundings, with November right after the midterms, are going be pivotal.”
On Sees Little Evidence of Second-Round Inflation – Andrew Bailey, Bank of England
“To the extent we have seen evidence, it’s quite subdued,.. It’s too early. (The UK economy is) more resilient than we expected it to be”
On Europe Not at Stage Where ESM Has to Jump In – Pierre Gramegna, European Stability Mechanism
“We have a full range of instruments that can be used, and obviously we monitor the situation all the time, But we are not at all at the stage where the ESM has to jump in.”
Top Gainers and Losers- 16-Oct-26*
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