Sales of investment-grade U.S.corporate bonds are on pace for the slowest week of the year as aflood of debt last week and trade tensions cool demand.High-gradebond issuance is so far just 6 percent of the low-end projection of$15 billion for the week, and headed for the smallest amount sinceDecember, according to data compiled by Bloomberg. No borrowersstepped up on Monday or Wednesday, and Charter Communications Inc.was the only name to announce a deal Thursday.The falloff in salesis more than just summer doldrums. Last week deals from WalmartInc. and Bayer AG helped boost total issuance to the most sinceMarch at $44 billion. Trade tensions have also pushed investors tothe safety of Treasuries, driving the 10-year yield to the lowestsince May on Wednesday.“I think they likely jammed too much supplythrough last week, and some digestion has to take place, which putspressure on secondary spreads,” said Scott Kimball, portfoliomanager at BMO Global Asset Management in Miami. “But moreimportantly, there has been a significant decline in U.S. benchmarkTreasury yields.”Lower yields are good forcorporate borrowers, “but from the buyer's perspective, people areconcerned about rates and duration-sensitive credit, which is whatIG is,” Kimball said.The secondary market is also under pressure.The Bloomberg Barclays benchmark investment-grade bond index is atthe widest level since December 2016, while the cost to buyprotection has risen to the highest since March.The largest supplyhas already come and gone, Bank of America said in a recent note.United Technologies Corp. is the only large deal expected thissummer and second-quarter earnings season will keep some companieson the sideline, allowing spreads to tighten.

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