Group 1: Market Trends - 2025 is expected to be the year when global investors recognize China's competitive edge over the rest of the world, leading to the disappearance of the China discount[1] - China's manufacturing sector accounts for 30% of global manufacturing value added, with exports of merchandise being double that of the US[5] - China's exports rose by 7% in 2024, with significant increases to Brazil (23%), UAE (19%), and Saudi Arabia (18%)[32] Group 2: Technological Advancements - China has emerged as a leader in various high-value industries, including EVs, telecom equipment, and defense technologies, with a notable launch of the world's first sixth-generation fighter plane in 2025[2][3] - China holds around 70% of patents in the EV sector and nearly half of all patents applied for globally in 2023[13][14] Group 3: Investment Opportunities - The MSCI China Index is trading at a record discount of 10 P/E points compared to the world index, indicating substantial room for growth in Chinese equities[52] - The anticipated financial liberalization in China could enhance corporate profitability and attract more foreign investment, driving a bull market[28] Group 4: Economic Comparisons - China's economic growth rate is more than double that of most developed markets, despite facing cyclical slowdowns[5] - Comparisons are drawn between China's current economic trajectory and Japan's in the early 1980s, suggesting a similar rise in value-added manufacturing and innovation[6][18]

Investment Rating - The report does not explicitly state an investment rating for the industry or specific securities [1]. Core Insights - The analysis focuses on the spreads to Treasury Spline and Swap Analysis, indicating a detailed examination of the relative value of various securities [2][34]. - The report highlights the importance of monitoring the average spreads and their fluctuations over a 61-day data history, which is crucial for understanding market trends [3][34]. - The report emphasizes the significance of coupon rates and their impact on investment returns, particularly in the context of different maturities [12][62]. Summary by Sections Treasury Spline and Swap Analysis - The report provides a comprehensive overview of the Treasury Spline and Swap Spread, detailing various maturities and their corresponding spreads [31][34]. - It includes specific data points such as the average, maximum, and minimum spreads, which are essential for evaluating investment opportunities [36][50]. Spread to Treasury Spline - The analysis includes a breakdown of spreads to Treasury Spline, indicating the relative performance of different securities against benchmark rates [48][60]. - The report notes that the bars representing spreads are shaded to indicate significant deviations from the average, which can signal potential investment opportunities [22][41]. Interpolated Swap Spread - The report discusses the interpolated swap spread, providing insights into how these spreads relate to overall market conditions and investor sentiment [23][55]. - It highlights the importance of understanding the dynamics of swap spreads in relation to Treasury yields, which can influence investment decisions [10][37].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Reserve balances in the US have fallen to their lowest levels since 2023, now constituting around 11% of GDP, indicating a shift towards "ample" liquidity conditions [2] - Repo rates have increased since May, with SOFR settling in a new range of 5.33% - 5.35%, and daily volumes are at record highs, reflecting high demand for repo leverage [2] - The August quarterly refunding announcement introduced a recommendation for T-bills to constitute an average of around 20% of outstanding debt, which may lead to higher bill supply in the coming quarters [3] - The Treasury has ramped up its debt buyback operations, which could positively impact funding conditions by reducing dealer inventories [3] - The report anticipates that the Fed will introduce plans to wind down quantitative tightening (QT) in early 2025, concluding around mid-year [6] - Money market funds (MMFs) are expected to see moderate asset growth as the yield gap between bank deposits and money market yields remains wide [7] - SOFR is expected to rise over the coming months, potentially reaching or exceeding the IORB level in Q4 [7] - A technical adjustment to lower the ON RRP rate by 5 basis points could occur later this year if SOFR rises sustainably [8] Summary by Sections Recent Developments - Reserve balances have declined significantly, and ON RRP balances have resumed their decline [2] - Repo rates have increased, with high demand for repo leverage due to rising Treasury inventories [2] Policy and Market Outlook - QT is expected to stop when reserve balances reach around $3 trillion, with plans to wind down QT anticipated in early 2025 [6] - ON RRP usage is expected to decrease, with average daily use potentially falling to around $200 billion by mid-September [6] Money Market Funds - Moderate asset growth is expected for MMFs as the yield gap remains historically wide [7] - MMFs have been conservative on WAM extensions, leading to increased investment in repo [40] Treasury and Debt Operations - The TBAC's updated recommendation for T-bills may result in higher bill supply over the next few quarters [47] - The Treasury anticipates a reduction in the TGA from $850 billion to $700 billion, which may alleviate year-end funding pressures [3]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific securities [1]. Core Insights - The upcoming auction on August 8, 2024, will offer $25 billion of 30-year bonds, unchanged from the previous auction [4]. - Thirty-year yields have decreased by 16 basis points from the last auction, currently trading around 4.25% [4]. - Indirect bidder participation has decreased to 60.8%, the lowest since November, while direct bidder participation has increased to 23.4%, the highest since December 2014 [4]. - Investment funds accounted for 74.5% of the total allocation, marking an increase from June's 73.4% and the highest since January [4]. - The auction had a tail of 2.3 basis points, while the previous auction had a stop-through of 1.3 basis points [4]. Summary by Sections Auction Statistics - The average size of the 30-year bond auction is $22.3 billion, with the July 2024 auction size at $22.0 billion [2]. - The cover ratio for the July auction was 2.30, slightly lower than the 1-year average of 2.39 [2]. - Direct and indirect bidders accounted for 84.1% of the total bids in July, with direct bidders at 23.4% and indirect bidders at 60.8% [2]. Auction Allotments - In the July auction, investment funds took 74.5% of the total allocation, while foreign and international bidders accounted for 7.4% [3]. - The total less SOMA for the July auction was $16.4 billion, with dealers and brokers taking $3.9 billion [3]. Bidding Aggressiveness - The auction bidding aggressiveness index indicates a more aggressive bidding environment compared to previous auctions [5][6]. Federal Reserve SOMA Add-ons - The Federal Reserve is expected to rollover $4.75 billion into its SOMA portfolio during the upcoming auction [4].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report indicates that reserve balances have fallen to their lowest levels since 2023, constituting around 11% of GDP, which is the lowest since the start of quantitative tightening (QT) [1] - Repo rates have increased since May, with the Secured Overnight Financing Rate (SOFR) settling in a new range of 5.33% - 5.35%, and daily volumes are at record highs [1] - The Federal Reserve is expected to introduce plans for winding down QT in early 2025, concluding around mid-year, contingent on market functioning [5] - Money market funds (MMFs) are expected to see moderate asset growth as the gap between bank deposits and money market yields remains wide [6] - The Treasury has ramped up its debt buyback operations, which could positively impact funding conditions by reducing dealer inventories [2] Summary by Sections Recent Developments - Reserve balances have recently fallen to their lowest levels since 2023, now around 11% of GDP [1] - Repo rates have increased, with SOFR in the range of 5.33% - 5.35% and record high daily volumes [1] - Fed funds rate remains stable despite pressures in repo markets, likely due to large liquidity held by GSEs [1] Policy and Market Outlook - QT is expected to stop when reserve balances reach around $3 trillion, with plans to wind down QT anticipated in early 2025 [5] - ON RRP usage is expected to decline, potentially falling to around $200 billion by mid-September [5] - SOFR is expected to rise, potentially above the Interest on Reserve Balances (IORB) level in Q4 [6] Money Market Funds - Moderate asset growth is expected for MMFs as the yield gap remains wide [6] - MMFs have been conservative on weighted average maturity (WAM) extensions, leading to more investment in repo [39] Treasury and Debt Operations - The TBAC recommends T-bills to constitute an average of around 20% of outstanding debt, which may increase bill supply in the coming quarters [2][46] - The Treasury anticipates a reduction in the TGA from $850 billion to $700 billion by December 31, which may alleviate year-end funding pressures [2]

Investment Rating - The report does not explicitly provide an investment rating for the US Fixed Income market Core Insights - The bullish bias for the US front-end rates is no longer valid due to a terminal rate priced slightly below reasonable neutral estimates and improved lending standards indicating a lower likelihood of recession [3][7][10] - Term premia are structurally low, suggesting a stronger case for higher long-end rates from both data and valuation perspectives [3][10] - Recent data indicates a weaker labor market, with the private sector quit rate at 2.3%, historically consistent with an unemployment rate above 4.5% [3][4] - The Fed's Senior Loan Officer survey shows improvement, weakening the bullish bias for front-end rates [6][7] - The market is pricing a terminal rate slightly below 3.25%, requiring evidence of a recession for a significant rally in front-end rates [7][10] Summary by Sections Bond Market Strategy - The rationale for maintaining a bullish front-end bias has diminished due to recent repricing and data [3] - The case for being long the front-end is more nuanced compared to previous months, with improved lending standards and a stable labor market [6][10] Macro Portfolio Update - The report outlines various trades and their rationales, indicating a shift in strategy towards maintaining positions rather than entering new ones [11] Fed Liquidity and Money Market Monitor - Repo rates have shown increased firmness, with elevated demand for leverage contributing to higher rates [13] - The Fed's QT is expected to continue until reserve balances fall to around $3 trillion, with potential adjustments to mitigate upward pressure on overnight rates [14][18] Economics - The report anticipates stable inflation data, with expectations for CPI and PPI to show similar monthly gains [35][37] - The upcoming economic calendar includes significant data points that could influence Fed rate cut discussions [38][40] Fixed Income Charts of the Week - The report includes various charts that illustrate trends in the fixed income market, including the relationship between credit spreads and potential inter-meeting cuts [21][24]

Investment Rating - The report provides a general investment rating for Restaurant Brands International Inc. bonds as "Ba2" for certain term loans and notes, indicating a speculative grade with potential for moderate credit risk [8]. Core Insights - Restaurant Brands International reported Adjusted EBITDA of $720 million for Q2'24, reflecting an increase of 8.3% compared to $665 million in Q2'23, with revenues reaching $2.08 billion, up 17.2% from $1.78 billion in Q2'23 [2][3]. - The performance of individual segments showed growth, with Tim Hortons achieving Adjusted EBITDA of $307 million (+7.7%) and revenues of $1.03 billion (+2.3%), while Popeyes reported Adjusted EBITDA of $70 million (+7.7%) on revenues of $194 million (+12.1%) [5][6]. - The International segment also performed well, with Adjusted EBITDA of $176 million (+2.6%) and revenues of $232 million (+5.9%), contributing to system-wide sales of $4.52 billion, an increase of 9.2% [6]. Financial Summary - The financial snapshot for Q2'24 indicates significant revenue growth across various segments, with Burger King revenues at $364 million (+11.3%), Tim Hortons at $1.03 billion (+2.3%), and Popeyes at $194 million (+12.1%) [3][5]. - The total revenue for Restaurant Brands International was $2.08 billion, marking a 17.2% increase from the previous year [3]. - The company ended Q2'24 with total debt estimated at $14.14 billion, reflecting a pro-forma leverage of 5.1x, indicating a slight increase from 4.9x in Q1'24 [6].

Investment Rating - The report does not explicitly state an investment rating for the industry [1]. Core Insights - The report highlights a focus on upcoming economic data releases, including US CPI and retail sales, which are expected to show a rise of +0.20% MoM for both headline and core CPI [2][4]. - In the UK, inflation is projected to increase to 2.3% for headline CPI and 3.5% for core CPI, indicating a steady rise after two months at the target [3]. - Japan's Q2 GDP is anticipated to show a real GDP growth of 2.7% QoQ annualized, while the PPI is expected to rise by 2.9% YoY [4]. - In China, industrial production is expected to slow slightly to 5.2% YoY, while retail sales are projected to improve to 2.5% YoY [4]. Economic Data Releases - The report outlines a detailed calendar of significant economic data releases for the week of August 12, including US July PPI, CPI, retail sales, and industrial production [5]. - Key earnings reports from major corporations such as Walmart, Cisco, and Alibaba are highlighted, indicating a focus on consumer health and corporate performance [4][5]. - The report notes that the University of Michigan consumer survey is expected to show an increase in the sentiment index to 69.1 from 66.4 in July [2]. Central Bank Focus - The report mentions upcoming rate decisions from central banks in Norway and New Zealand, as well as the MLF rate fixing from China [3][4]. - The Federal Reserve's Jackson Hole symposium is noted as a significant upcoming event for monetary policy discussions [2].

Investment Rating - The report rates ModivCare Inc.'s bonds as Buy, indicating an expectation for these bonds to outperform other issues in the sector over the next three to six months [1][27]. Core Insights - ModivCare Inc. (MODV) reported Q224 EBITDA of $45 million, slightly above Bloomberg consensus of $42 million and a significant improvement from $32 million in Q124, leading to a last twelve months (LTM) EBITDA of $179 million [4][18]. - The company won new NEMT contracts in Q224, generating $33 million in annual revenue, which is expected to positively impact the second half of 2024 [1][10]. - ModivCare's leverage target is set at 3x, with current net leverage reported at 5.2x, indicating a focus on improving core operations and considering strategic options [6][18]. - The company has lowered its 2024 EBITDA guidance to a range of $185-195 million, primarily due to weaker-than-expected results from its PCS segment [7][18]. - ModivCare's liquidity position is reported at $99 million, with cash of $11 million and revolver availability of $89 million [16]. Financial Performance - The LTM net leverage as of June 30, 2024, is reported at 5.2x, which includes $45 million of cost savings, while a calculation without these add-backs shows a net leverage of 6.5x [5][18]. - The company expects to generate positive free cash flow (FCF) in 2024, with a conversion rate of approximately 30% of EBITDA [7][18]. - ModivCare's revenue for FY2024 is projected at $2,818 million, with EBITDA expected to be $180 million [19]. Contractual Developments - In Q224, ModivCare secured new contracts that contribute to a total of approximately $211 million in annual revenue from contracts won in 2023 and 2024 [10]. - The company anticipates monetizing its Matrix asset in late 2024 or early 2025, which could significantly improve its leverage profile [13][18]. Market Position - ModivCare's PCS EBITDA improved to $15 million in Q224, up from $11 million in Q124, but remains below the annual run rate potential of $75 million [11]. - The company expects to exit 2024 with PCS margins approaching 10%, with NEMT margins projected to increase by roughly 100 basis points [12].

Investment Rating - The report does not explicitly state an investment rating for the industry or company, but it indicates that the results are "good enough to support current debt trading levels" [2]. Core Insights - The consolidated Adjusted EBITDA for Q3'24 was $104.7 million, a decrease of 3.3% compared to $108.4 million in Q3'23, while revenues increased by 21.4% to $504.2 million from $415.4 million in the previous year [4][10]. - The Restricted Group reported an estimated EBITDA of approximately $97 million, reflecting a growth of 13% from around $86 million in Q3'23 [4][10]. - Management noted improvements in business volumes at Mohegan Inspire, which is approaching profitability, and progress on debt reduction [2][4]. Revenue Summary - Mohegan Sun generated revenues of $235.7 million in Q3'24, up 2.2% from $230.7 million in Q3'23, while Mohegan Pennsylvania saw revenues increase by 5.3% to $68.7 million [3][4]. - Digital operations reported revenues of $41.9 million, a significant increase from $16.7 million in Q3'23 [3][4]. - Niagara Resorts experienced a revenue decline of 7.1%, down to $75.3 million from $81.1 million in the previous year [3][4]. Adjusted EBITDA Analysis - Mohegan Sun's Adjusted EBITDA was $62.9 million, down 8.2% from $68.5 million in Q3'23, while Mohegan Pennsylvania's Adjusted EBITDA increased by 40.6% to $19.8 million [4][5]. - Digital operations achieved an Adjusted EBITDA of $23.1 million, nearly doubling from $11.6 million in Q3'23 [4][9]. - Mohegan Inspire reported a loss of $7.6 million in Q3'24, indicating challenges in its early operational phase [9]. Operational Metrics - Table revenue decreased to $46.4 million, down 2.7% from $47.7 million in Q3'23, while slot revenue remained relatively stable at $98.7 million, a slight decrease of 0.2% [5][9]. - The lodging segment showed positive trends, with RevPAR increasing to $152, a 0.5% rise from $151 in Q3'23, driven by higher occupancy rates [5][9]. - Mohegan Inspire celebrated its grand opening on March 5, 2024, and received a five-star hotel rating, which may enhance its market position [10]. Debt and Leverage - The estimated restricted group debt stands at $1.77 billion, with a leverage ratio of 5.2x based on LTM EBITDA of $337 million [10][12]. - Management anticipates refinancing the 8.000% Second Lien Notes due 2026 before they become current maturities in 2025 [10].