Thursday, Jul. 23, 2015

Corporate Bond Market
Global equities are mixed this morning as another slew of earnings hits the tape and Greece seems to be on the back burner for now.  So far all the numbers look good,  with a big beat from General Motors leading the charge.  Kimberly-Clark, UAL, BSX , and Eli Lilly also posting good numbers.  There are still a number of big guys to report including AT&T, CAT, SBUX, Chubb, Amazon, etc. to name just a few.  US Equity futures are unchanged to up slightly at the moment (DJIA Fut +3, S&P Fut +1.25).  Overseas Europe down slightly, Euro Stoxx -.22%, Asia equities all up, NIkkei +.44%, Hang Seng +.46%.  Treasuries are rallying across the curve with the 10yr last at 2.316% ahead of next week's Fed meeting. Oil is trading unchanged at $49.20 and Gold is actually up a little bit to start.  The IG index is opening a touch wider at 68.5/69 but we are actually seeing some opportunistic buying from accounts to start.  Cash spreads are probably unchanged walking in.

The focus of the primary market yesterday was a multi-tranche deal from Intel.  The 30yr seems to be the darling, having priced particularly cheap on the curve.  It's trading roughly 7bps tighter outperforming the other tranches.  JP Morgan also came to market with $1.1bln in a $25 par pfd , 6.15% fixed for life.  It was very active in the gray market with better buyers at a discount.  So far this morning we have a new deal from Macquarie Bank but would expect more to come.    In secondary trading it was another rough day for some of the energy and metals and miningnames.  In particular CHK trading down another 3-4pts, although into the close we saw better buying at the lows.

On the economic data front,  Initial Jobless Claims , Continuing Claims due out today.


Municipal Bond Market
Munis are stronger again this morning after rallying for three straight days. We continue to see strong demand in both the secondary and primary markets as buyers continue to split their time between the two.   NY Dorms were met with extremely strong demand in the primary with 5’s of 2027 pricing @ 2.59%.  We expect to see the focus switch to the secondary this morning with the majority of the weeks calendar wrapped up.  30-day supply is lighter with about $11.2bln on tap over the next 30 days versus 12bln yesterday.

In credit news, PREPA bondholders are proposing an exchange that would delay debt payments for several years and result in a $2.5bln investment in the utility.    Any type of proposal is positive for PREPA debt as we being to get some clarity on what a restructuring will look like.  PREPA debt is unchanged in early morning trading.  Benchmark GOs continue to stabilize in the low 70s with 5mm bonds trading @ $73.00 (11.45%).

30-Day visible supply: $ 11.2bln