The U.S. ABS primary market priced just $2 billion last week as an interest rate hike, a surprising Treasury announcement, high-profile corporate downgrades and pending employment numbers and conspired to keep things quiet.
On Tuesday the Federal Reserve ratcheted up the target federal-funds rate another "measured" 25 basis points to 3% and on Thursday the Labor Department reported initial jobless claims rose by a seasonally adjusted 11,000 to 333,000 for the week ended April 30, with the non-farm payrolls due out last Friday. Sources said it was not necessarily the numbers but the expectation of those two announcements that may have been enough to make issuers lethargic. Barclays Capital ABS researcher Jeff Salmon said issuers may have been advised to hold off on their deals because of the heightened potential for volatility brought on by the Fed announcement and employment numbers. "You would certainly have a situation of saying let's hold off until things are a bit more stable,'" said Salmon.