Tuesday, October 3, 2017

Good morning- Global equities are mostly higher for a second straight day. Excluding Spain, European stocks are up with the Euro Stoxx 50 up 3 points, FTSE up 19 points, and the DAX unchanged. In Asia, the Nikkei is unchanged while the Hang Seng is up 12 points. US equity futures are pointing to new record highs with the DOW up 31 points, S&P up 2 points, and the NASDAQ up 7.5 points. Treasury yields are 0.5-2bps higher across the curve in steepening fashion as the yield on the US 10 yr has backed up to 2.359%. Yesterday we saw $5bn price across 7 issuers. Both the Bloomberg Barclays IG and HY indices continue to grind to multi-year tights. There is no significant economic data scheduled for today.

In other news, the White House is said to have ruled out talks with North Korea despite Tillerson saying the U.S. was talking to North Korea “directly, through our own channels.” In the muni market, top-rated bonds finished mixed on Monday as traders wait for the NY TBTA and King County Washington deals to price.  

Monday, October 2, 2017

Good morning- Global equities are mostly higher as we kick off the first trading day of the fourth quarter. European stocks are up with the exception of Spain, who is dealing with a Catalonian push for independence. Spain’s benchmark bonds fell to the lowest levels in almost 3 months as more than 800 people have been injured. Nevertheless, the Euro Stoxx 50 is up 6 points, FTSE up 44.5 points, and the DAX is up 52 points. In Asia, the Nikkei is down 30 points while the Hang Seng is up 51 points. US equity indices are also higher in spite of the deadliest mass shooting in US history. The DOW is up 26 points, S&P up 2.25 points, and the NASDAQ up 7 points. The yield on the US 10 yr is up about half a basis point to 2.323% as the Bloomberg Barclays IG index closed at the tightest level in more than 3 years on Friday. This morning we’re also seeing commodities trade lower as WTI is now below $51/bbl and gold is trading down for the 4th time in the last 6 sessions.

Friday, September 29, 2017

Good morning- Global equities are mixed to start the final trading day of the third quarter. European stocks are mostly higher with the Euro Stoxx 50 up 11 points, FTSE up 46.5 points, and the DAX up 51 points. Asian stocks are slightly lower with the Nikkei down 20 points and the Hang Seng down 9 points. In the US, the DOW is down 12 points, S&P down 1.25 points, and the NASDAQ up 7.75 points. The yield on the US 10 yr is down to 2.305% as the Bloomberg Barclays IG index continues to grind tighter. Additionally, oil has settled down to $51.56/bbl after climbing to $53 yesterday. In other news, Deutsche Bank had its long-term credit rating cut one notch by Fitch yesterday. Other than that, there is no significant economic news or primary/municipal issuance scheduled for today.

Thursday, September 28, 2017

Good morning- Global equities are mixed to start this morning’s session. In Europe, the Euro Stoxx 50 is up 3 points, FTSE down 12 points, and DAX up 36.5 points. Asian stocks are mostly negative with the Nikkei down 60 points and the Hang Seng down 97 points. US equities are all lower after touching an all-time high yesterday. The DOW is down 30 points, S&P down 3.25 points, and the NASDAQ down 14.75 points. The yield on the US 10 yr is up to 2.334% as market participants assess President Trump’s tax plan. The Bloomberg Barclays IG and HY indices closed tighter on Wednesday as the curve continue to steepen. Moreover, oil is on its way to $53/bbl after a surprising drop in crude inventories. In economic news, we will hear from several Fed speakers and see the numbers on weekly jobless claims.

Things are starting to get interesting in the muni market. Fortunately, the tax-exempt status of muni bonds is not in jeopardy under Republican’s plan for tax reform, however, the federal deduction for state and local taxes would be repealed. The plan would also eliminate the alternative minimum tax (AMT) which the majority of private-activity bonds are subject to. With respect to Puerto Rico, Trump waived the Jones Act in order to facilitate relief efforts on the island. The Jones Act requires shipments of goods between two U.S. ports to be made with American-flagged vessels which limits the amount of shipping and makes imports significantly more expensive for the island.

Wednesday, September 27, 2017

Good morning-  Global equities are mostly higher to start this morning’s session. European stocks are all positive with the Euro Stoxx 24 up points, FTSE up 37 points, and DAX up 73.5 points. Asian stocks are more mixed as the Nikkei is up 60 points and the Hang Seng is down 27. US equities are all in the green with the DOW is up 27 points, S&P up 2.25 points, and the NASDAQ up 19.75 points. The yield on the US 10 yr is up to 2.289% amid hawkish commentary from Yellen and the anticipation of tax cuts. The Bloomberg Barclays IG and HY indices closed tighter on Tuesday bringing IG to YTD tights. Moreover, oil is now up to $52/bbl and the VIX is back below 10. Today the U.S. Treasury is expected to sell $13b 2y FRNs and $34b 5y notes and we will also see durable goods orders and pending home sales. 

 

In other news, Trump is set to unveil his broad tax reduction plan after Senate Republicans said that they would not vote on the health bill. In Europe, Volkswagen’s Scania unit was fined 880.5 million euros ($1.03 billion) by the European Union for price-fixing.   

 

Thursday, September 21, 2017

Good morning-  Global equities are mixed to start this morning’s session. European stocks are all higher with the Euro Stoxx 50 up points, FTSE up 1 point, and DAX up 38 points. Asian stocks are mixed as the Nikkei is up 20 points and the Hang Seng is down 6. US equities are slightly lower following yesterday’s hawkish rhetoric from the Fed. The DOW is down 9 points, S&P down 1.5 points, and the NASDAQ down 4 points. The yield on the US 10 yr is mostly unchanged at 2.259% as the Bloomberg Barclays IG and HY indices continue to tighten. Moreover, oil is still hovering above $50/bbl and the VIX is back below 10. Today we will see weekly jobless claims and hear from the Philly Fed.  

In other news, China’s credit rating was downgraded to A+ from AA- at S&P. Citing risks from soaring debt, S&P revised China’s outlook to stable from negative. This is the first time S&P has cut China’s sovereign credit rating since 1999. Other notable events from this week include the Bank of Japan keeping its monetary stimulus unchanged yesterday and Toys “R” Us filing for Chapter 11 bankruptcy protection on Monday.

Tuesday, September 19, 2017

Good morning-  Global equities are mixed to start the session. In the Europe, the Euro Stoxx 50 is down a point, FTSE up 27 points, and DAX down 22.5 points. Asian stocks are also mixed as the Nikkei is down 50 points and the Hang Seng is up 14. US equities are all higher this morning ahead of President Trump’s UN address regarding North Korea. The DOW is up 16 points, S&P up 1.75 points, and the NASDAQ is up 6 points. The yield on the US 10 yr is up 0.5-1bps to 2.215% as the Bloomberg Barclays IG index continues to tighten. Moreover, oil is now above $50/bbl. Today we’re expected to see housing data and building permits.

Friday, September 15, 2017

 

Good morning-  Global equities are mostly lower to start the session with the exception of Asia. Europe is all in the red with the Euro Stoxx 50 down 8 points, FTSE down 91 points, and DAX down 8 points. The Asian markets are all higher this morning as the Nikkei is up 70 points and the Hang Seng is up 9. US equities, on the other hand, are more mixed as Wall Street digests yet another North Korean missile launch. The DOW is up 1 point, S&P down 1.75 points, and the NASDAQ is down 3 points. The yield on the US 10 yr is up roughly 1-2bps to 2.20%. With respect to credit, this week has been the busiest for HY issuance since March with yields at a 5-week low. Yesterday we saw $3.25 bn of HY new issuance come to market in 5 deals. This week has also been busy for IG which saw 46 different entities price $55 bn across 75 tranches. No new issuance is expected today but we will see data on retail sales and empire manufacturing.

Thursday, September 14, 2017

Good morning-  Global equities are mixed to start the session. Europe is mostly negative with the Euro Stoxx 50 down 8 points, FTSE down 58 points, and DAX down 35 points. In the Asian markets, the Nikkei is up 30 points while the Hang Seng is down 11. US equities are also mixed this morning after Trump and Democrats struck a Dreamers Deal. The DOW is up 2 points, S&P down 1.5 points, and the NASDAQ is down 7.75 points. The yield on the US 10 yr is up roughly 2bps to 2.206%. Yesterday saw $14bn of IG new issue price across 8 issuers which brings month-to-date volume to over $80bn. Once again, North Korea made it back into the headlines after it threatened to use nuclear weapons against Japan and turn the U.S. into “ashes and darkness” in response to the new United Nations sanctions passed earlier this week. With regards to economic data, we will see CPI numbers and weekly jobless claims.

Monday, September 11, 2017

Good morning-  Global equities are mostly positive to start the session. Europe is all in the green with the Euro Stoxx 50 up 37 points, FTSE up 24 points, and DAX up 127.5 points. Asian stocks are a little more mixed as the Nikkei is up 40 points and the Hang Seng is down 4. US equities are all higher this morning as Hurricane Irma proved to be less potent than anticipated and a potential North Korean missile launch never came. The DOW is up 109 points, S&P up 11 points, and the NASDAQ is up 39 points. The yield on the US 10 yr is up 2-4bps to 2.095% and the Bloomberg Barclays IG index has widened to levels not seen since June. Last week we saw more than $46bn in IG new issue supply and today the U.S. Treasury will sell $24bn 3yr notes.

Wednesday, September 6, 2017

Good morning—Global equities are once again mixed to start the session. The Euro Stoxx up 2 points, DAX up 46 points, and the FTSE down 34.5 points. In the Asian markets, the Nikkei is up 30 points and the Hang Seng up points. US stock futures slightly higher this morning after getting crushed yesterday. The DOW is up 34 points, S&P up 3.75 points, and the NASDAQ up 16.5 points. Treasuries have come down a bit after hitting their highest levels since January 2016. The yield on the 10yr UST is around 2.072%. WTI crude is now above $49/bbl. Today is expected to be another active session in the IG primary market. Yesterday we saw $22.3bn price from 15 issuers across 31 tranches. Gilead Sciences plans to issue debt to fund its $11.9b purchase of Kite Pharma while United Technologies plans to fund cash portion of Rockwell Collins acquisition with debt issuances and cash on hand. Today’s economic data includes MBA mortgage applications which came in at 3.3%. We will also see the Fed release its Beige Book.

Tuesday, September 5, 2017

Good morning—Global equities are mixed to start the session. The Euro Stoxx up 3 points, DAX up 60.5 points, and the FTSE down 4.5 points. Asian markets are quiet with the Nikkei unchanged and the Hang Seng down 11 points. North Korea’s potential plans to launch another ballistic missile sent US stock futures lower this morning. The DOW is down 55 points, S&P down 5 points, and the NASDAQ down 9.25 points. Treasuries are rallying amid the heightened tension from North Korea. The yield on the 10yr UST is down roughly 3bps to 2.142%. WTI crude is now above $48/bbl as Goldman sees demand rising in Harvey’s wake. In other news, United Technologies agreed to buy Rockwell Collins for $23 billion. Today’s economic data includes factory orders and durable goods orders in addition to hearing from some Fed speakers.

Thursday, August 31, 2017

Good morning—Global equities are mostly higher to start the session while both IG and HY are slightly tighter. European stocks are all in the green with the Euro Stoxx up 23 points, DAX up 65 points, and the FTSE up 44.5 points. Asian markets are quiet with the Nikkei unchanged and the Hang Seng up 3 points. For a second straight day, US stocks are all positive to start this morning. The DOW is up 57 points, S&P up 5.75 points, and the NASDAQ up 11 points. In the IG space, $2.5bn priced Wednesday from two deals. This brings August volume to $112.56bn and YTD volume to $1.14 trillion. The yield on the US 10yr is back down to 2.133% after rising a few bps over night. Today’s economic data includes personal income, spending, and initial jobless claims.

Munis finished flat yesterday as very few deals came to market. The yield on the 10-year benchmark muni GO was unchanged from 1.86% on Wednesday and there are no major deals expected for today and tomorrow. In Puerto Rico, we’re not seeing much activity despite the recent news about the oversight board suing governor Rossello. Yesterday we also saw the Chicago BOE bonds continue to rip higher. With the exception of the Illinois Finance Authority, the Chicago BOE bonds are the most actively traded credits in Illinois.

Wednesday, August 30, 2017

 

Good morning—Global equities are mostly higher to start the session as fears of North Korea have somewhat abated. European stocks are all in the green after getting crushed yesterday. The Euro Stoxx is up 17 points, DAX up 64 points, and the FTSE up 29 points. Asian markets are mixed with the Nikkei down 10 points and the Hang Seng up 297 points. US stocks are all positive to start this morning with the DOW up 24 points, S&P up 0.75 points, and the NASDAQ up 9.25 points. After breaking below 2.1% yesterday, the yield on the US 10yr is back up to 2.145% and credit ended the day weaker. It’s worth noting that gasoline futures rose to a 2-year high as Tropical Storm Harvey continues to wreak havoc. Today’s economic data includes ADP employment change and GDP.

 

Munis finished stronger yesterday as traders saw Goldman price California’s $2.5 billion GO bonds for institutions. The deal, which was rated Aa3 by Moody’s and AA-minus by S&P and Fitch, came to market in two parts. The $788.82 million of various purpose GO’s were priced as 3’s and 5’s to yield from 0.77% in a split 2018 maturity to 2.26% with a 5% coupon in 2028 and 2.50% with a 5% coupon in 2031, 2.86% with a 4% coupon and 2.56% with a 5% coupon in a split 2032 maturity, 2.73% with a 5% coupon in 2035 and 3.30% with a 4% coupon, and 2.95% with a 5% coupon in a split 2047 maturity. In other news, we saw Chicago Board of Education bonds continue to rally as Illinois is set to end their funding crisis. The Chicago Board of Education’s taxable bonds due in 2039 rallied more to 93.5 cents on the dollar which is 3 points above last week’s close. Yesterday in Puerto Rico, we saw the federally-appointed oversight board sue Governor Rossello for rejecting furloughs.

Tuesday, August 29, 2017

Good morning—Global equities are lower start the session after North Korea fired an unidentified ballistic missile over Japan on Tuesday. The Euro Stoxx is down 46 points, DAX down 223 points, and the FTSE is down 87 points. Asian markets are mixed with the Nikkei down 80 points and the Hang Seng up 39 points. US stocks are all in the red to start this morning with the DOW down 92 points, S&P down 12 points, and the NASDAQ down 43 points. With investors flocking to safe havens like gold, the yield on the US 10yr fell all the way to 2.12%. Furthermore, IG credit was mostly flat for the third straight session and HY was slightly tighter. Consumer confidence will be the focus of today’s economic data.

 

Munis finished flat yesterday as retail investors saw California’s $2.5 billion GO bond deal come to market. Goldman priced the deal which was rated Aa3 by Moody’s and AA-minus by S&P and Fitch. The $788.82 million of various purpose GO’s were priced for retail as 4’s to yield from 1.09% in 2021 to 2.23% with a 5% coupon in 2028 and as 5’s to yield 2.50% in 2031. A split half of a 2032 maturity was priced as 4’s to yield 2.86% and the split half of a 2047 maturity was priced as 4’s to yield 3.31%. The other $1.72 billion of various purpose refunding GO’s were priced as 4’s to yield from 0.77% in 2018 to 2.75% in the split half of a 2031 maturity. Lastly, a split half of a 2036 maturity was priced as 4’s to yield 3.09% and the split half of a 2037 maturity was priced as 4s to yield 3.12%. The new issue calendar for the weeks shows $5.77 billion of negotiated deals and $1.10 billion of competitive sales.

Monday, August 28, 2017

Good morning—Global equities are mostly higher to start the session as fears of North Korea have somewhat abated. European stocks are all in the green after getting crushed yesterday. The Euro Stoxx is up 17 points, DAX up 64 points, and the FTSE up 29 points. Asian markets are mixed with the Nikkei down 10 points and the Hang Seng up 297 points. US stocks are all positive to start this morning with the DOW up 24 points, S&P up 0.75 points, and the NASDAQ up 9.25 points. After breaking below 2.1% yesterday, the yield on the US 10yr is back up to 2.145% and credit ended the day weaker. It’s worth noting that gasoline futures rose to a 2-year high as Tropical Storm Harvey continues to wreak havoc. Today’s economic data includes ADP employment change and GDP.

 

Munis finished stronger yesterday as traders saw Goldman price California’s $2.5 billion GO bonds for institutions. The deal, which was rated Aa3 by Moody’s and AA-minus by S&P and Fitch, came to market in two parts. The $788.82 million of various purpose GO’s were priced as 3’s and 5’s to yield from 0.77% in a split 2018 maturity to 2.26% with a 5% coupon in 2028 and 2.50% with a 5% coupon in 2031, 2.86% with a 4% coupon and 2.56% with a 5% coupon in a split 2032 maturity, 2.73% with a 5% coupon in 2035 and 3.30% with a 4% coupon, and 2.95% with a 5% coupon in a split 2047 maturity. In other news, we saw Chicago Board of Education bonds continue to rally as Illinois is set to end their funding crisis. The Chicago Board of Education’s taxable bonds due in 2039 rallied more to 93.5 cents on the dollar which is 3 points above last week’s close. Yesterday in Puerto Rico, we saw the federally-appointed oversight board sue Governor Rossello for rejecting furloughs.

Friday, August 25, 2017

Good morning—Global equities are mostly higher to start the session as fears of North Korea have somewhat abated. European stocks are all in the green after getting crushed yesterday. The Euro Stoxx is up 17 points, DAX up 64 points, and the FTSE up 29 points. Asian markets are mixed with the Nikkei down 10 points and the Hang Seng up 297 points. US stocks are all positive to start this morning with the DOW up 24 points, S&P up 0.75 points, and the NASDAQ up 9.25 points. After breaking below 2.1% yesterday, the yield on the US 10yr is back up to 2.145% and credit ended the day weaker. It’s worth noting that gasoline futures rose to a 2-year high as Tropical Storm Harvey continues to wreak havoc. Today’s economic data includes ADP employment change and GDP.

 

Munis finished stronger yesterday as traders saw Goldman price California’s $2.5 billion GO bonds for institutions. The deal, which was rated Aa3 by Moody’s and AA-minus by S&P and Fitch, came to market in two parts. The $788.82 million of various purpose GO’s were priced as 3’s and 5’s to yield from 0.77% in a split 2018 maturity to 2.26% with a 5% coupon in 2028 and 2.50% with a 5% coupon in 2031, 2.86% with a 4% coupon and 2.56% with a 5% coupon in a split 2032 maturity, 2.73% with a 5% coupon in 2035 and 3.30% with a 4% coupon, and 2.95% with a 5% coupon in a split 2047 maturity. In other news, we saw Chicago Board of Education bonds continue to rally as Illinois is set to end their funding crisis. The Chicago Board of Education’s taxable bonds due in 2039 rallied more to 93.5 cents on the dollar which is 3 points above last week’s close. Yesterday in Puerto Rico, we saw the federally-appointed oversight board sue Governor Rossello for rejecting furloughs.

Thursday, August 24, 2017

Corporate Bond Market

Good Morning – Global equity markets are all negative to start this morning. Gold, the Japanese yen, and bonds are higher as tensions continue to heat up with North Korea. In Asia, we’re seeing the HANG SENG -15 points, NIKKEI -40 points, and CSI 300 +2.5 points. Right now, both Asian and European credit spreads are slightly wider.

Stock-index futures in the US are lower to start the morning with the DOW -51 points & S&P -11.25 points. The yield on the 10yr UST is down 2.5 bps to 2.237% and the 30yr is at 2.819%. Today the Treasury is set to sell $23bn of 10y notes. Corporate spreads will be opening wider by 1.1 bps as yesterday saw $19.475b price from 5 issuers across 13 tranches. High yield is also slightly wider as Cable & Wireless, Tesla, Parexel, ClubCorp, and Weekley Homes are expected to come to market this week. In Economic news, no relevant data is scheduled for today.

Municipal Bond Market

Munis finished mixed for a second straight day as traders saw the New York City Transitional Finance Authority sell $1.5 billion of fiscal 2018 future tax secured subs in 6 separate offerings. Merrill won the $411.95 million of tax-exempts with a true interest cost of 3.74%. The issue came to market as 5’s to yield 2.93% in 2040 and 4’s to yield 3.36% in 2045. RBC won the next largest tranche of $406.82 million subordinate tax-exempts with a true interest cost of 3.63%, which was priced as 5’s to yield 2.66% in 2033 and 2.86% in 2039.

Wednesday, August 23, 2017

Corporate Bond Market
Good morning—Global equities are mostly lower to start the morning. In Europe, the Euro Stoxx is down 10 points, FTSE down 7.5 points, and the DAX down 32 points. Asian stocks are more mixed with the Nikkei down 30 points and the Hang Seng up 103 points. US stocks are all negative to start the session following comments by President Trump on Nafta and a potential government shutdown. Right now, the DOW is down 60 points, S&P down 8.5 points, and the NASDAQ down 19 points. The US 10yr is mostly unchanged at 2.21% after both IG and high-yield credit indexes closed tighter yesterday. Oil has dropped to $47.62 (NYM WTI crude) after a reported increase in U.S. gasoline stockpiles. Today we’re expected to see data on new home sales which is estimated at 610,000. In the IG space, there’s no domestic issuance expected today but the Development Bank of Japan and Kreditanstalt fuer Wiederaufbau are expected to price today in deals totaling $4bn.

Municipal Bond Market
Munis finished Tuesday unchanged as Texas sold $5.4bn of tax and revenue anticipation notes in the largest short-term sale of the year. With treasuries flat, the yield on the 10-year benchmark muni GO remains at 1.90%. The Issuance for this week is light with volume estimated at $4 billion. In the negotiated sector, Wells Fargo priced $256.4 million of Washington Healthcare revenue bonds for the Virginia Mason Medical Center in a deal rated Baa2 by Moody’s and BBB by S&P. The bonds came to market as 5’s to yield 2.52% 2025 and 3.51% in 2037 with a term bond in 2042 to yield 3.96% with a 4% coupon.

Tuesday, August 22, 2017

Corporate Bond Market
Good morning—Global equities are mostly higher to start the morning. In Europe, the Euro Stoxx is up 18 points, FTSE up 100 points, and the DAX up 96.5 points. Asian stocks are more mixed with the Nikkei up 20 points and the Hang Seng down 21 points. US stocks are all in the green to start the session with the DOW up 34 points, S&P up 4.25 points, and the NASDAQ up 22.5 points. The US 10yr stands at 2.20% after both IG and high-yield credit indexes widened yesterday. Today we’re expected to see data on US crude inventories in addition to Richmond Fed manufacturing. As volatility continues to heat up, issuance is rather weak today. While there are no significant deals in the high-yield space, we’re expecting to see Swedish Export Credit and IBRD price today in the IG space.

Municipal Bond Market
Munis finished stronger on Monday as the yield on the 10-year benchmark muni GO fell one basis point to 1.90%. Issuance for this week is light with volume estimated at $4 billion. All eyes will be on a $5.4 billion note offering from the state of Texas which is the largest short-term sale of the year. The deal,  which is rated MIG1 by Moody’s and SP1-plus by S&P, will be sold in the competitive space as Series 2017 tax and revenue anticipation notes. Today the negotiated sector will be dominated by Washington Health Care’s $265.895 million of Series 2017 revenue bonds for the Virginia Mason Medical Center. Wells Fargo is set to price the deal today, which is rated BBB by S&P and Baa2 by Moody’s.