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Morning Commentary: Convertibles trading quiet as CPI tanks markets; Datadog active
By Abigail W. Adams
Portland, Me., Feb. 13 – The convertibles secondary space was quiet early Tuesday as the latest U.S. Consumer Price Index report tanked markets.
Equity indexes sank as Treasury yields jumped with the CPI report coming in hotter-than-expected, further dashing market expectations for imminent rate cuts.
The Dow Jones industrial average was down 490 points, or 1.26%, the S&P 500 index was down 1.15%, the Nasdaq Composite index was down 1.16% and the Russell 2000 index was down 3.4% shortly before 11 a.m. ET.
There was $48 million of convertibles trading on the tape about one hour into the session with few names seeing a significant amount of trading activity.
However, Datadog Inc.’s 0.125% convertible notes due 2025 were active with stock volatile after earnings.
The 0.125% convertible notes traded down 6 points outright with stock off as much as 9% at the open.
However, they pared their losses as stock fought its way back to positive territory as the session progressed.
The 0.125% convertible notes were trading at 150.625 versus a stock price of $134.59 early in the session, according to a market source.
There was $6 million in reported volume.
Datadog’s stock traded as low as $123.50 at the open but was lifted to $136.71, an increase of 1.43%, shortly before 11 a.m. ET.
Datadog reported earnings per share of 44 cents, which were largely in line with expectations.
Revenue was $589.65 million versus analyst expectations for revenue of $568.25 million.
However, the cybersecurity company provided guidance that was softer than expected, which triggered the early selling.
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