Thursday, Dec. 18, 2014

Corporate Bond Market
Market continues to rally after yesterday’s biggest positive gain in more than a year, DJI fut +195, S&P fut +24, Euro +71, while IG is -2⅞ (66⅜/66⅞) and the 10yr is at 2.169%..  Stocks are up after the Federal Reserve pledged patience in raising interest rates.  Euro bonds are up and the franc weakened after the Swiss National Bank announced a negative deposit rate for the first time since the 1970s as Euro and Russian issues weigh heavy.  Putin not making the situation any better as he blamed the EU and US of trying to undermine his country as well as blaming external factors for the sharp decline in the ruble..  Oil has also extended its rally as Saudi Arabia’s oil minister said the market is going through a temporary problem.

In credit news, Genworth delayed its results and reserve review into next year sending the equity into a decline.  The statement indicated that the review is taking longer than anticipated.  The bonds are quoted down 2pts so far but not much trading.  Will update levels as and when.   Good numbers out of Oracle (ORCL).  The company announced higher than expected earnings and the stock is up 5%.   M&A news: ACE is set to buy Fireman's high net worth personal lines from Allianz for $365m.    Lastly, Alcatel-Lucent reportedly in talks to merge with Nokia.  ALUFP shares up as much as 6.5%,  too early to see levels on the bonds.

New issue market continues to be quiet..  Economic data for the day includes:  Initial jobless claims, survey 295k, prior release of 294k..  Leading index expected to come in at 0.5%, slightly lower than prior release of 0.9%..

 

Municipal Bond Market
Munis were weaker and volume was light on the day as the market waited for Fed commentary.  Today should be mostly focused on the secondary market with barely any new debt being priced.

We continue to see large amounts of items out for the bid with very little of it actually trading.  There are already two large lists out as of 8am this morning. 

Volume in in PR GO 8’s normalized after a surge on Tuesday. Benchmark GOs were stronger on the day with 5mln+ trading around 84.50 (9.762%).    Bonds continue to trade in a $84.00-$85.50 range.

30 Day visible supply: $3.68bln

New Issue:
No notable deals today.

UST 10yr 2.141%