Thursday, Jun. 25, 2015

Corporate Bond Market
Another day, another Greek headline setting the tone.  This morning European officials are indicating that they have the preliminary workings of a deal with Greece.  Global equities are reacting favorably with  Euro Stoxx up +10% , DJIA Futures +74, and S&P Futures +8.   Firm tone in credit as well, with the Investment Grade Index wrapped around 67, roughly 0.25 tighter.  Cash spreads unchanged to -2bps to start.  The treasury market is selling off a bit.  The yield on the 10yr last 2.387%.  Oil still holding steady at $60.

Yesterday was a very light day for new corporate issuance.  The only real deal of note was a long bond from Brown Forman.  They priced a new 2045 issue at +145bps.  They traded 3-4bps tighter in secondary activity.  We saw better buyers.  That brings WTD to $13.35bln out of a potential $20-25bln.  As summer Friday's tend to be slow , we would expect there to be a few deals today.

Nothing particularly noteworthy in terms of credit news,  economic data due out later this morning should set the tone: Personal Income and Spending (8:30am), Initial Jobless Claims (8:30am), Markit PMI (9:45am), and Bloomberg Consumer Comfort (9:45am).


Municipal Bond Market
Munis are weaker this morning after firming up yesterday.  We saw the most demand in the front end of the curve with very little buying out in the long end.  This is the same trend that we have seen over the past few weeks and I expect it to continue for the foreseeable future.  The new issue calendar looks light today with the majority of the week’s larger deals already priced.  30-day supply is slightly weaker this morning ahead of next week’s shortened holiday week with $7.8bln on tap.

Puerto Rico GOs traded weaker yesterday after the GDB’s chairman said he would resign.  Benchmark GO 8’s of 2035 traded as low as $78.125 (10.66%) after trading as high as $83 (9.97%) in late May.  We continue to see very little trading in longer insured paper as investors continue to hold onto PR paper.

30-Day visible supply: $12.3bln