Thursday, Jun. 11, 2015

Corporate Bond Market
Firm tone to the markets this morning.  European stocks are all up overnight as Greece renews their commitment toward a deal, and Prime Minister Tsipras meets with the leaders of France and Germany to that end.   Stateside equity futures follow suit with DJIA Fut +13 and S&P Fut +.25.   The Treasury market is rallying a bit as New York walks in, with the 10yr yield last at 2.453%.  Credit spreads feel a touch better as we open the day with good follow-on demand for yesterday’s  new issues.  The Investment Grade Index is a touch tighter at 65.5/66 last.  Cash spreads are unchanged to 2bps tighter depending.   The Retail Sales and Jobless Claims numbers due out at 8:30 should set the tone for the rest of the session.

Yesterday we saw large deals from CSCO and British American Tobacco.  Total primary market activity including these two was $9.5bln in supply.  Both deals are trading tighter in the secondary market.  We continue to see good demand for Tuesday’s RAI deal as well, despite another large tobacco name in the market.    Week to date, we have seen $26bln in new corporate paper, out of an estimated $30bln.  There will probably be one to two deals today before the summer Friday kicks in. 

Economic Data: Retail Sales (8:30am), Initial Jobless Claims (8:30am), and Bloomberg Consumer Comfort (9:45am) .


Municipal Bond Market
Munis are stronger this morning after trading weaker again yesterday.  Attention was on the primary with the pricing of $252mln Atlanta GOs, the deal was met with strong demand and 4.75s of 2035 priced @ 3.50%.  We continue to see the market focusing on the primary as the secondary remains reluctant to take losses which has resulted in minimal volume in the secondary.   30-day supply is lighter this morning with $9.2bln scheduled versus $10.7bln yesterday.

PR paper remains extremely quiet as we approach the July 1st payments.  Volume in Benchmark GOs continues to be extremely light versus daily averages.  We are starting to see a little bit of a pullback in PR as the majority of buyers sit on the sidelines as they await more color.  Benchmark GOs traded @ $81 (10.25%) after trading around $83 on Friday (9.975%). 

30-Day visible supply: $9.2bln

UST 10yr 2.475%


Constant Maturity Swap Rates (CMS) 
2yr     0.992
5yr     1.912
10yr   2.557
30yr  2.973

30's-5's     1.061
30's-2's     1.981