- Approximately $150 billion has been raised in the IPO market this year, exceeding the $107 billion record set in 1999
- Copper prices reached an eight year high last week
- The yield on the Bloomberg Barclays U.S. Investment Grade bond index hit 1.85% last week
Top Three Market Headlines
IPOs Boom in 2020: Fueled by a surging stock market and the strong performance of recent technology listings, the initial public offering (“IPO”) market has had a record-breaking year. To date, almost $150 billion has been raised on U.S. exchanges in 2020, surpassing the previous full-year record of $107 billion set in 1999 at the height of the dot-com boom, according to Dealogic. Two high-profile offerings last week, DoorDash and Airbnb, contributed to this record-breaking total, as each offering raised upwards of $3 billion. The fervor for IPO’s was reflected in the price spikes for each of the two companies on their first day of trading: DoorDash closed up 86% from its offering price, while Airbnb doubled.
Industrial Metal Prices Soar Alongside Economic Recovery: Industrial metal prices have risen sharply from pandemic-related lows in late March amid a faster-than-expected economic recovery. Copper prices last week recently reached their highest level in eight years, while iron ore has been one of the best-performing assets of 2020. Other industrial metals, such as aluminum and zinc, have also increased over 40% since mid-May. Accelerating manufacturing activity in the U.S. and China has supported the rise―China, in fact, accounts for approximately half of the global demand for copper. On the supply side, closed mines from the pandemic and labor strikes have added to the upward price pressures.
Inflation-Adjusted Corporate Bond Yields Fall Below Zero: Last week the average inflation-adjusted (aka “real”) yield on investment-grade corporate bonds fell below zero for the first time ever (based on records going back to 2003). According to the Federal Reserve Bank of St. Louis, the annual expected inflation rate reached 1.89% last week, while the yield on the Bloomberg Barclays U.S. Corporate Investment Grade Index sunk to 1.85%. Corporate bond yield have fallen dramatically since late March as the Federal Reserve has kept Treasury interest rates at rock-bottom levels while strong investor demand for yield has squeezed the spread of corporate bond yields relative to those of Treasuries.