Tuesday, Jan. 27, 2015

Corporate Bond Market
As the NY Post said this morning, "Snow Big Deal".  While only 5-8 inches fell in the NYC area it's still a slow start as the public transport shutdown keeps many traders away from their desks.  US Equity futures are lower to start, DJIA Fut -188, S&P Fut -14.8 as yesterday brought a slew of disappointing earnings from big companies like Procter & Gamble and Caterpillar to name a few.   European stocks tumbled as well and Greek bonds continued their slide bringing the yield on 10yr Greek debt up to 9.43%.  Russian bonds also declined on S&P's cutting the country's rating to junk.  Stateside the 10yr treasury last at 1.80%,  Oil last at $45.

Credit markets opening weaker on thin early trading. The IG23 index currently +1¼ at 66½/67.  Cash is roughly +2-3bps wider. We saw a ton of supply yesterday as $11bn+ came to market in Investment Grade credit.  We were active in the SVB Financial 10yr that priced at +170 and was at least -5bps with better buyers.  The Synchrony Financial (SYF) 5yr deal priced at +140 and traded -5bps as well. Would expect follow on buying in that deal as well.  The Union Pacific Corp 5yr and 20yr deals were well bid but in the 40yr tranche we saw mostly better sellers. We are not expecting anything to price today. In secondary trading we continue to see better buying of selective high yield names.   Investors are looking for their opportunities this year and willing to leg into hard to find names they like.  We see opportunities in AM, GT, and NMG to name a few.

On the economic data front ,  Durable Goods , Case Shiller, Consumer Confidence, and New Home Sales all due out today.


Municipal Bond Market
Munis are unchanged to start off the morning.  The focus today will be the pricing of two of the week’s largest primary deals, $1bln PA ST GOs & $180mln Long Beach unified school districts.  We continue to see healthy 30 day visible supply numbers heading into February ($10.7bln) and expect buyers to remain focused on putting money to work in the primary.

Benchmark GOs continue to trade slightly weaker. 3000m bonds traded around $84.50 after trading as high as $85.50 last week. We have seen bonds trade in the $85-$87 range over the past two weeks.

30 Day visible supply: $10.7bln

New Issue:
$180mln    Long Beach Unified School District, CA    2015-2043
$20mln     Mooresville, NC Gen Obs                           2016-2035
$1bln         Pennsylvania Stat G.O.s                             2016-2035
$20mln     Portland, ME                                              2015-2034

UST 10yr 1.818%