Thursday, Jan. 22, 2015

Corporate Bond Market
The market is in a bit of a holding pattern as we await the ECB announcement at 8:30 on further QE/bond buying.  In the meantime global equities are mixed.  US stock futures are up with the DJ Fut +46 and S&P Fut +5.8.  European equities are mixed with no significant movement ahead of ECB.  In China stocks continue to rise and Japanese stocks are unch to slightly down.   US Treasuries have sold off with the 10yr last at 1.925%, on possible concerns that the ECB will under-deliver,   and oil has rallied to $48.83.

It was a mixed day for the credit markets yesterday with spreads anywhere from +5bps to -5bps depending on sector and name.  There was roughly $5bn in new issue with the star performer being the new LabCorp deal.   They priced a four tranche deal that traded anywhere from 5 to 10bps tighter across the board.  We saw better buying from accounts in the gray and follow on buying this morning. WTD new issue is at $12bn in Corporates out of a possible $15-20bn this week expected.

Headline makers to start:  American Express continues to trade under a bit a pressure after announcing more layoffs and possible challenges to their business in Q1.  Google has announced they will begin selling phones which will operate on the Sprint and T-Mobile networks.  Earnings this morning are uneventful with the only significant beat coming from Travelers who reported 3.07 vs. 2.53 expected.  Economic Data:  Initial Jobless Claims (8:30am), FHFA House Price Index (9:00am), and Bloomberg Consumer Comfort (9:45am) are due to be released today.


Municipal Bond Market
The tone in muni market feels weak this morning for the second straight day.  It seems as if most people are holding off in the secondary as they await comments from the ECB.  Once again, the muni market is dominated by the new issue calendar. The highlight of today’s primary is the pricing of $16mln Tooele, UT Board of Educations.  Buyers continue to put cash to work slowly as they favor the primary market over secondary offerings.

Benchmark GOs traded slightly weaker on the day with bonds off about a point. Bonds traded around $84.50 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:
$4mln    Lee's Summit, MO G.O. Bonds     2015-2019     Aa1/   
$3mln    Nantucket, MA G.O. Refunding    2016-2025    Aa1/   
$16mln   Tooele, UT Board of ED               2016-2029    Aaa/    

UST 10yr 1.851%