Tuesday, Aug. 25, 2015

Corporate Bond Market
After yesterday’s turmoil, the equity markets are better today with both European and Asian markets up around 4%.  US equity futures are up big DJIA +558 and S&P +66.25. The catalyst for the move seems to be the action China’s central bank cutting its benchmark lending rate for the fifth time since November and lowering the amount of cash banks must set aside. The Treasury market is down with the 30-year off 1-14 and trading at 2.804%.  Oil broke through the $40 closed yesterday at $38.25/bbl.  This morning it is up at $39.34./bbl.  Credit is opening up better with the Investment Grade Index is -4.45bps 83/84.

No news in the corporate world this morning and there were no deals brought in the new issue market yesterday.

Economic data due out later this morning: House Price Purchase Index (9:00am) and Consumer Confidence (10:00 am).


Municipal Bond Market
Munis rallied significantly to start the week as the market looked towards US Treasuries for direction.  We saw a large amount of items out for the bid from customers as they tried to take advantage of Mondays rally.  Attention will shift to the primary this morning as we begin to see some of the weeks larger deals price.  The highlight of today’s calendar will be the pricing of the week’s largest competitive deal, $372mln Cobb-Marietta Coliseum bonds.  30-day supply is stronger weaker this morning with $12.11bln on tap over the next 30 days.

PR volume remains extremely light as the market awaits the pricing of the potential PRASA deal.  At this point, PRASA has been moved to day-to-day status and the market seems to be hesitant about whether the deal will actually get done.  The bid side on most non-insured PR paper is about 2pts weaker than where we saw it trade early last week.  Puerto Rico GO 8’s of 2035 continue to struggle with bonds trading as low as 67.875 (12.37%) after trading as high as $71.625(11.70%).

30-Day visible supply: $12.11bln


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