The Wall Street Journal - 16.08.2019

THEWALL STREETJOURNAL. ***** Friday,August16,2019|B11

TreasurySetsDebtSales

The Treasury Departmentwill

auction $94 billion in securities

next week. Details(all with mini-

mum denominations of $100):

Monday:$45 billion in 13-

week bills, areopening of an is-

sue first sold on May 23, 2019,

maturing Nov. 21, 2019.Cusip

number: 912796ST7.

Also Monday, $42 billion in

26-week bills, dated Aug. 22,

2019, maturingFeb. 20, 2020.

Cusip number: 912796TG4.

Noncompetitivetendersfor

both issues must bereceived by

11 a.m. EDT Monday andcom-

petitivetenders,by 11:30 a.m.

Thursday:$7 billion in 29-

year, six-month 1%Treasury in-

flation-protected securities, are-

opening of an issue first sold on

Feb. 28, 2019, maturingFeb. 15,

2049.Cusip number: 912810SG4.

Noncompetitivetenders must

be received by noon Thursday;

competitivetenders,by 1 p.m.

AUCTIONRESULTS

HerearetheresultsofThursday's Treasuryauctions.

Allbidsareawardedatasinglepriceatthemarket-

clearingyield.Ratesaredeterminedbythedifference

betweenthatpriceandthefacevalue.

FOUR-WEEKBILLS

Applications $135,749,314,300

Accepted bids $55,000,219,300

" noncompetitively $1,437,264,900

" foreign noncompetitively $0

Auction price (rate) 99.841333

(2.040%)

Coupon equivalent 2.077%

Bids at clearing yield accepted 80.26%

Cusip number 912796VV8

The bills, dated Aug. 20, 2019, mature on Sept. 17,

2019.

EIGHT-WEEKBILLS

Applications $121,819,720,700

Accepted bids $40,000,208,700

" noncompetitively $262,670,700

" foreign noncompetitively $100,000,000

Auction price (rate) 99.696667

(1.950%)

Coupon equivalent 1.989%

Bids at clearing yield accepted 26.72%

Cusip number 912796VZ9

The bills, dated Aug. 20, 2019, mature on Oct. 15, 2019.

WeWorkCo.’sdebt is surg-

ing following the com-

pany’s fi ling foraproposed

initia lpublic offering,asi n-

vestor sbet thecompanycould

retirebonds beforethey ma-

ture in 2025.

Thepriceof

the $699 mil-

lion bond

jumped 3%

Thursdayto 105.292cents on

the dollar and is up7.4% since

Tuesday, before thecompany

filed for the IPO, according to

data from MarketAxess.

About $330 million of the

bond schanged hands in the

past two days,the most active

trading sinceWeWork issued

them in April 2018, according

to MarketAxess.

WeWork hopesto raise $3

billionto $4 billion in the IPO,

TheWall Street Journal previ-

ouslyreported, aswell as up

to $6 billion by issuing se-

cured loans, according to the

filing.

About $3 billion of the

loans would beavailableto the

companyafter the IPO,with

the balanceavailable intwo

later installments.

WeWork’sability to borrow

the two final installmentsof

the newloans would bere-

stricted by the indentureofi ts

existing bonds,accordingto

the filing.

Thecompanymay “explore

avariety of newfinancing

and/or refinancing transac-

tion s, including withrespect

to the senior notes,”according

to the filing.

Aspokes woman forWe-

Work declinedto comment.

Thenew ca sh from an IPO

and the planned loanswould

support the office-rentalcom-

pany’s gr owth needs, but the

companywould likelycontinue

to burn cash as itexpands,ac-

cording to areport Wednesday

by S&P GlobalRatings, which

rates WeWork single-B.

Therating sfirm assumes

thebonds willremain out-

standing in its analysis.

WeWork bondswere the

second-most-actively traded

bonds in theU.S. Th ursda ybe-

hind thedebt ofGeneral Elec-

tricCo.

GE’s 30-year bondfell 6%

to 89.25centsonthe dollar,

according to MarketAxess, af-

teraccountingexpert Harry

Markopolos publishedareport

alleging fraudulentfinancial

filings by theconglomerate.

U.S. government bondscon-

tinuedto rally, with the yield

on the benchmark 10-year

Treasurynoteat1 .534%, down

from 1.596% Wednes-

day. Yields fall as bond prices

rise.

BYMATTWIRZ

WeWork

Bonds Get

Lift From

IPO Filing

CREDIT

MARKETS

day, using incorrect indexval-

ues,would needto be revis-

ited. One options-market

veteraninC hicag osaid the in-

cidentcould have been wors e.

“It wasafairly scarything,

butint he end didn’t matter

much,”he said.

Other datadisturbances

continued on Tuesday. The

Dowstood still at 26290.63for

about 13 minutes on Tuesday

afternoon because of an issue

at S&P.“Our indexmanage-

mentteam has already re-

solved the issue and is cur-

rently assessing anynecessary

remediationto av oid further

interruptions,” the S&P

spokeswoman said.

Then when markets closed

at 4p.m., traderswereflum-

moxedwhen dataproviders

likeBloombergand FactSet

showedincorrect closing

pricesfordozens of stocks.

Apple—whichhad been up

more than 4%forthe da y—

suddenly seemedto re vert to

itsclosing pricefromMonday

of $200.48ashare. About 15

minutes later,the correct clos-

ing priceof$ 208.97appeared

on traders’ screens.

“It raised abit ofared

flag,”said KarynCavanaugh,a

Bogleheads.org, a community

websitefor Vanguar dinves-

tors.

But itwasn’t real. “This

wasamarketwide issue,not a

Vanguar dglitch,”aspokes-

woman forthe mutual-fund gi-

ant said.

Apieceofn etworking hard-

ware had malfunctioned ear-

lier Mondayinthe NYSE’s

main datacenter in Mahwah,

N.J.,accordingto the Consoli-

datedTape Association, an in-

dustrygroup that oversees the

datafeed. Theproblem caused

delays in reporting informa-

tion over a publicfeed that

broadcasts real-time dataon

NYSE-listed stocks,anissue

that took about six hoursto

resolve, the CTA said.

ANYSEspokesman de-

clinedto comment.

Also affected by the glitch:

More than 20 indexes includ-

ing the Dow and the S&P 500

were initiallyreported at in-

correct values on Mondayand

had to be recalculated, accord-

ing to S&P DowJones Indices,

the entity officiallyresponsi-

ble for publishing them. Cor-

rected indexvalues were dis-

tributed throughout the day

on Tuesday, an S&P spokes-

woman said.

S&P 500 optionswere in

turn impacted. Exchangeoper-

atorCboe Global MarketsInc.

said trades in some options

contractsthat expired Mon-

strategist withVoya Invest-

ment Management. “It kind of

remindsyoujust howreliant

we are on data.”

Theissue wascaused by er-

roneous trades,accordingto

NasdaqInc., whichgenerates

official closing pricesfor Ap-

ple and otherNasdaq-listed

stocks.

At about4p.m. on Tuesday,

abrokerage executed trades in

80 stocks,including Apple,

Bank of AmericaCorp.and

Gene ralMotor sCo. at Mon-

day’sclosing prices instead of

Tuesday’s, said Ed Coughlin,

director of trading services at

Nasdaq. He declinedto name

the brokerage.

Thebrokerage —whichcan-

celed the trades minutes

later—incorrectly flagged

them asexecuted during nor-

maltrading hoursinstead of

as af ter-hourstrades,said Mr.

Coughlin.That confused data

providers, he said.

Bloomberg andFactSet re-

jected thatexplanation, noting

that the datawarehouse where

the erroneous Apple tradewas

recorded is operated byNas-

daq. “We believe the issue at

handwasassociated with a

Nasdaq feed,” aFactSet

spokeswoman said. A spokes-

man forBloombergagreed.

Mr.Coughlin saidNasdaq han-

dled the situation properly.

—DawnLimcontributedto

thisarticle.

Volatile stock markets, re-

cess ion fearsand theU.S.-

China tradefight have traders

on edge. Now, they aregrap-

pling with another problem:

garbled data.

Thetroubles started Mon-

daywith aglitch onakey

market-datafeed operated by

the NewYork Stock Ex-

change.That wasfollowedby

what looked likecalamitous

drops inVanguar dGroup mu-

tual funds,incorrect pricesfor

stocks likeAppleInc.being

flashed overBloombergLP

terminals and the DowJones

IndustrialAverag esuffering a

mysterious outage.

Theerror sdidn’t cause the

Dow’s800-point drop on

Wednesday, and they didn’t

lead to widespread disrup-

tions,likesome past market

snafus.But theywere are-

minder of data’scentralityto

today’s markets and how any

problemscanfurtherrattle in-

vestor swhen stocks areal-

ready gyrating.

Visitor stoV anguard’sweb-

siteonMondayevening saw

manyfunds in free fall.At one

point, the siteshowedthe

VanguardWellesley Income

Funddown 56% and theVan-

guardTargetRetirement In-

comeFund down 46%.

Thereported drops

prompted consternation on

BYALEXANDEROSIPOVICH

Data Errors PlagueStock Traders in a Volatile Week

Dow,minutebym inuteTuesda yafternoon

Flatlined

At about 1:41 p.m. onTuesday, the DowJones Industrial

Averagestoppedmoving because of an issue with the

publication of the index.

Source:FactSet

26280

26290

26300

26310

26320

26330

26340

1:30p.m. 2:00p.m.

DISRUPTION

managing director in equity

trading atStifel Nicolaus.“Peo-

ple ar estill broadlyconcerned

about the global economyand

if the global economyslows

further,energy is asector that’s

going to gethit.”

U.S. oil pricesfell 1.4%to

$54.47 abarrel,weighing on

energy stocks,which were the

weakest sector in the S&P 500.

Exxon Mobilfell 0.6% to $67.25

and Chevron lost 0.7% to

$116.95.

On the trade front, China

said that it plansto push back

againstproposedU.S. tariffs.

Marketshavebeen especially

sensitivetot rade headlines of

late. Stock futures initially tum-

bled overnight on the com-

mentsbefor emarching higher

when aforeign ministryrepre-

sentativetook amoreconcilia-

tory tone.

Among individual stock

movers, networking-equipment

companyCiscoSystemsfell

$4.36, or 8.6%, to $46.25 on a

disappointingforecastforthe

currentquarter ,andGeneral

Electricdropped $1.02, or 11%,

to $8.01, af teraresearchreport

alle gedthe strugglingconglom-

erate has masked the depths of

itsproblems,resulting in inac-

curat eand fraudulentfinancial

filingswith regulator s.

Elsewhere, the Stox xEurope

600 slipped0.3%. OnFriday

morning, Australia’sS&P ASX

200,which fell 2.9%Thursda y,

wasdownafurther0.2%. Hong

Kong’sHang Seng Indexwas up

0.6%, the Shanghai Composite

wasup0 .8%and SouthKorea’s

Kospi wasdown0.9%. At mid-

dayinT okyo,the Nikkeiwasup

0.1%. Thedollar wasups lightly

to¥106.18.

isn’t problematic,interestrates

arelow¥ and earningsare

growing atamoderatepace, so

the backdrop is still favorable

forstocks to trend higher.”

Despitethe positivesignals

from thereta il sector,investors

continueto grapple with signs

of adivergingU.S. economy.

Industrial outputfell in July,

as the manufacturing sector

continued to struggle with

trade-related headwinds,the

Federal Reservesaid.

Meanwhile,disappointing

datafromGermanyand China

on Wednesdaysparked growth

fears, and the bond market sent

an ominous signal when yields

on the 10-year Treasurynote

briefly fell belowtwo-year

yieldsforthe firsttime since

2007—oftenaprecursorto a

recess ion.

Theyield on the benchmark

10-year Treasurynoteextended

itsdecline,settling at 1.534%

vers us 1.596%Wednesday.

Yields fall as prices rise.

Theworries about slowing

growth, along withasimmer-

ingtrade disputewith China

anduncertainty over the size

and timing of theFederal Re-

serve’ spotential interest-rate

cuts, have rattled markets. Ma-

jor stock indexesare trading

about 6% belowthe highs they

set last month.

Therecent volatility ex-

tended Thursda yafternoon

when the Dowindustrials

briefly slumped morethan 100

points, coinciding withadrop

in Treasury yields.Both quickly

bounced back.

“The biggest thingIkeep

hearing from investor sisc on-

cerns about global growth and

arecession,”said JustinWiggs,

MARKETS

U.S. stocks advanced as up-

beat dataonAmerican spend-

ing eased investors’ fearsabout

apossiblerecess ion.

Retail-salesdatashowed

consumer spending,which ac-

countsfor morethan two-

thirds ofU.S. economic activity,

remainsapillar of domestic

growth, even as other partsof

the economyfalter and the out-

look overseas darkens.

TheDow Jones Industrial

Average

climbed 99.97

points, or 0.4%,

to 25579.39.

TheS&P 500 added7points, or

0.2%, to 2847.60 while theNas-

daq Compositeslipped 7.32

points, or 0.1%, to 7766.62.

Themoves came aday after

allthree major indexesdropped

about 3% and the Dowindustri-

als suffered their biggest de-

clin eoft he year.

Strong resultsfromretailer

toWalmartahead of the holi-

dayshopping season addedto

the upbeat tone.Walmart

shares jumped $6.49, or 6.1%, to

$112.69.

Several otherreta ilersin-

cludingTarget,Home Depot

andLowe’sarescheduledto re-

port earningsnextweek,pro-

vidingaclearer pictureoft he

health of the sector.

“We’r estill farawayfrom

slipping into arecession that

could cause theconsumerto

retract spending and accelerate

apath of economic slowing,”

said TerrySandven, chief eq-

uity strategist atU.S. Bank

Wealth Management. “Inflation

BYJES SICAMENTON

ANDCAITLINOSTROFF

Consumer Spending Powers Stocks

THURSDAY’S

MARKETS

Needed Relief

Sharesof co nsumer-staplescompaniesroseThursdayonbetter-

than-expect edearningsfromWalmartandstrongretail-salesdata.

S&P500sectorperformance

Source:FactSet

ConsumerStaples

Real estate

Utilities

Communication services

Healthcare

Financials

Materials

Consumer discretionary

Informationtechnology

Industrials

Energy

1.51%

1.34

1.26

0.48

0.35

0.31

–0.01

–0.08

–0.19

–0.23

–0.52

Futures Tea Leaves

Signal Turbulence

Fear is still per colating in the

derivatives markets.

Near-datedfuturescontracts

tracking the CboeVolatilit yIn-

dex continue to hoverabove

those expiring later, asign that

investors ar estill girdingfortur-

bulenceins tocksnear-term.

The VIX, known asWall

Street’sfear gauge, and the fu-

tures contracts thattrack it,

tend to rise whenstocksare

falling because investors use de-

rivatives contracts to bet onvol-

atilityorh edge their portfolios

againststock declines.

Futures bets expiring sooner

generally trade belowthose ex-

piring later. This dynamic in the

futures curvecan in vert in times

of marketstress,and it stayed

inverted Thursday.

Contracts expiring inAugust,

September and Octobercon-

tinue to hoverabove those ex-

piring in November through De-

cember.

In another sign thatinves-

tors ar ebracing forbig swings,

theywerebetting Thursday

thatthe VIXwould jumpto as

high as 40 or 50,Trade Alert

data show. But the gauge has a

long waytogofor thosewa-

gers to payout. It fell 4.2%to

21.18 Thursday.

—GunjanBanerji

Signs ofSlow ing Economic Growth, Weak Demand Put Pressure on Oil Prices

Oil prices declinedfor a sec-

ond consecutive day amidwor-

ries that slowing global growth

will weigh on demand.

U.S. oil pricesfell 1.4%to

$54.47 a barrel. Brent, the global

benchmark, dropped 2.1%to

$58.23 a barrel.

Concerns that a trade battle

between theU.S. and China will

exacerbate a global slowdown

have mounted. China pledgedto

retaliate againstU.S. tariffs set

to be imposed incoming weeks,

despite PresidentTrump’s deci-

sion to delay implementing

some of the levies.

Natural-gas prices jumped

4.2% after theU.S. Energy Infor-

mationAdministration reported

a weekly increaseto gas instor-

age thatwas less than analysts

expected.

The EIA said gas inventories

rose 49 billion cubicfeet last

week, well belowforecasts in a

WSJ surv ey.

Traders say some parts of

the country includingTexas reg-

istered a surge in power demand

late last week dueto a heat

wave, which likely provided a fi-

nal liftto demand.

In precious metals, palladium

pricesrose 1.6%to settleat

$1,438.60 a troy ounce.

—IraIosebashvili

andDanMolinski NICK

OX

FO

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