Thursday, Jul. 30, 2015

Corporate Bond Market
Global equities are generally up this morning on not a lot of news. After stock market gains in the US yesterday, equity futures are down slightly this morning with S&P -1 and the Dow -9. The Fed yesterday expressed satisfaction with progress toward full employment, and it used one word, “some,” to describe the additional gains it wants to see before raising rates. Most pundits think that the Fed will wait until December to raise rates. Treasuries are mostly unchanged this morning with the US ten-year at 2.297%. Oil is up slightly at $49.05/ bbl. Credit markets are opening up off a touch with the IG Index +1/4 . The dollar continues to strengthen and gold continues to slid, down $10.99 this morning.

No main headlines this morning. Earnings season continues in full force with Facebook reporting strong revenue gains. US Steel, and Cliff Natural Resources reposted yesterdayand results were mixed in a sector that is very weak at this point in the cycle. There was a glimmer of hope in that both companies guided to improved earnings in the second half of the year Deutsche Bank reported overnight topping analyst’s estimates.

Yesterday was light in the primary market with just two deal in the market. Canadian Pacific Railway did a 10yr and 30yr and Hexcel Corp came with $300mln 10yr.

Economic data: GDP, Personal, Consumption GDP Index, Core PCE, Initial Jobless Claims all report at 8:30 am.


Municipal Bond Market
Munis are unchanged this morning after a mixed performance yesterday.  We saw some weakness on the longer end of the curve with aggressive buying on the front end.  Focus will be on the secondary today with the majority of the weeks new issue wrapped up.  30-day supply is stronger this morning with $13.7bln on tap over the next 30 days versus 10.7bln yesterday.

PR trading continues to be extremely light as we approach August 1st payments.   Benchmark GO 8’s of 2035 traded below $70 for the first time since July 10th.  1075m traded late in the day (12.03%) after trading as high as $71.25 (11.80%) on Monday.  We continue to see a massive sell off in COFINA subordinated debt.  Bonds continue to trade in the mid to high $30s.

30 Day visible supply: $13.7bln