Apple Is Borrowing Money to Buy Back Stock. What That May Say About the Bond Market.

$Apple (AAPL.US)$ Is Borrowing Money to Buy Back Stock. What That May Say About the Bond Market.
Bond issuance has long been a key capital-raising strategy for Apple. The company executed a similar offering in July 2021, selling $6.5 billion of notes in four parts, and as of June 25, 2022, it had $94.7 billion in long-term debt outstanding.
To some, Apple’s debt issuance could suggest that bond yields — and interest rates — might still be too low, given that the company still perceives credit as an attractive option. To be sure, the yield on the 10-year Treasury declined 0.33 percentage point to 2.64% in July, the largest one-month yield decline since March 2020.
According to $JPMorgan (JPM.US)$ ’s 5-year TIPS breakeven model, investors currently expect inflation to be at 2.8% in five years. That’s above the Fed’s 2% stated target, but I don’t think most market participants consider it alarming..So if the Fed funds is still somewhat below the optimal level, the gap doesn’t appear to be huge by this line of reasoning. If rates will keep increasing, which may have motivated Apple’s issuance.