Corporate Bond Market
News of a cease-fire in the Ukraine giving the market a firm tone to start. Stocks are up in Europe with Euro Stoxx 50 +1.25%, and FTSE 100 +.05%. Stateside we are starting with DJIA Fut +81 and the S&P Fut +9.60. Credit is -1 to start with the IG index at 65¾/66¼. Oil is trading at $50.34, and US Treasuries are selling off, pushing the 10yr through that 2% level to 2.038% for the first time in several sessions. Greek bonds rallied yesterday as talks ensued between the Greek government and the Euro-area finance ministers. The 10yr Greek bond yield traded down to 10.32% and the 3yr down to 19.01%. We are looking for the 8:30 economic data to set the tone on today's session.
Yesterday was quiet with most of the secondary activity in specific market movers such as Genworth. Bonds rallied between 6-10pts across the curve as investors reacted positively to clarity on the Genworth financial situation. We were most active in the hybrids which were up 6pts. Freeport-McMoran (FCX) also on the move , well bid across the board and moving tighter after S&P downgraded the company to BBB- but left them on outlook stable. Cash opening another -5bps tighter after trading tighter into the close. In other news, Verizon announced a waterfall tender for some of their longer debt, issuing 12.5bn in new notes as part of an exchange. Cisco reported yesterday with a significant beat of .53 vs .47 expected. On the flipside Total reported with a 17% YoY drop in profits on a significant writedown of its North American oil sands and shale assets. Familiar story in that sector at the moment.
The primary market saw $3.1bn of issuance yesterday, marked by a 10yr deal from Wells Fargo that traded issue to -2bps. There was also a 5yr and 10yr deal from single A issuer Rockwell Automation. The deal initially garnered a lot of interest but price talk was tightened aggressively and the deal traded just slightly better on the break. Homebuilders KBH and LEN also brought deals that performed well. WTD issuance numbers at $23.85bn, have not heard of any new issue yet today. Economic Data: Retail Sales (8:30am), Initial Jobless Claims (8:30am), and Bloomberg Consumer Comfort (9:45am) are due to be released today.
Municipal Bond Market
Munis continue to feel weaker this morning after another sloppy day of trading Wednesday. (Aaa) $5mln Montgomery Co, MD (c 24) 5s of 11/2027 traded at 2.36% (+7bps), after similar blocks traded +2bps earlier in the week. Today is scheduled to be one of the lighter day in this week’s primary, comprised mostly of micro deals. This should shift attention toward the secondary market and could lead to some volatility.
PR Benchmark GOs were pretty much unchanged on Wednesday after trading significantly weaker from the Puerto Rico recovery act announcement on Monday. We saw block trading around $82.75 (10.08%) which is slightly stronger than where we saw bonds trade Tuesday $82.125 (10.81%).
30 Day visible supply: $7.8bln
55mln Sequoia Union High School District, CA 2017-2029
10mln Sudbury, MA 2015-2032
15mln Union Parish School District, LA 2018-2035
17mln Weber State University, UT 2016-2030