Wednesday, Jan. 21, 2015

Corporate Bond Market
Global equities mixed overnight as the market digests last night's state of the union address.  In the states we are lower to start,  DJIA Fut currently -77,  S&P Fut -6.3.  Oil at 46.71,  the 10yr Treasury lower, yielding 1.796% this morning.  European markets feel strong on a feelign that the ECB will continue/step-up their stimulus measures at tomorrow's meeting.  In Asia it’s a mixed bag as the BOJ has stalled in its stimulus plan expansion.  On the flip side, Chinese markets strong on the prospect of continued stimulus.

Credit markets marginally weaker for choice to start.  The Investment Grade index is opening +⅝ at 72⅝/73⅛.  Cash spreads are unch after trading slightly tighter yesterday.  We saw $7bn+ in new issue with most of the deals performing well.  There was a new Goldman Sachs 5.5yr and 10yr deal, both tranches were well bid and traded about 5bps tighter.  In the energy space SWN brought a yieldy 3-part offering that traded tighter across the board.  We continue to see better buying today.  Endo Finace (ENDP) priced a 6% 2025 deal in the high yield market which traded up about a point.  Lastly we were very active in the new BAC $25 par preferred deal.   They priced a 6.5%, DRD/QDI deal, that is fixed for life.   So far this morning we have not seen any new deals but would expect that to change as the morning develops.

In credit news,  earnings out of US Bancorp this morning look good coming in at .78 versus .76 expected.  UnitedHealth Group also beat and regional bank, Fifth Third had a slight and negligible miss.  Later today, American Express, Kinder Morgan, and eBay all reporting.   IBM making headlines with a lower than expected profit forecast. Economic Data:  MBA Mortgage Applications (7:00am), Housing Starts (8:30am), Building Permits (8:30am) are due to be released today.


Municipal Bond Market
The tone in muni market is slightly weaker this morning.  We are currently seeing a spike in customer BWs compared to what we would normally see this early in the morning.  Once again, today should be highlighted by the new issue calendar.  The most notable deals of the day include $111mln Horry County, SC & about $40mln Newton, MA GOs.

Benchmark GOs traded slightly weaker to kick off the week. Bonds traded around $85.125 after trading as high as $85.50 on Friday. We have seen bonds trade in the $85-$87 range over the past two weeks.  

30 Day visible supply: $12.5bln

New Issue:
111mln    Horry County, SC School District     2016-2031    Aa1/AA
33mln    Moose Lake, MN ISD #197    2017-2035    Aa2/
30mln    Nassau County, NY G.O.s    2016-2033    A2/
19mln    Newton, MA    2016-2027    Aaa/
25mln    Newton, MA    2015-2044    Aaa/

UST 10yr 1.805%