Corporate Bond Market
Global equities are flying on news that China’s government resumed its intervention in the stock market in its continued effort to stabilize the market (Euro Stoxx up 2.98%, Nikkei +1.08%, Hang Seng +3.60%). US Equity futures are following suit with the DJIA Fut +168, and S&P FUt +19.25. Treasuries are also up with the 10yr last at 2.163%. The credit market is stronger across the board with the investment grade index between 1 and 1.5bps lower, last at 80 1/2/81 1/2. The Bloomberg Commodity Index climbed 1.6%, the most in more than two week. Oil is up this morning $1.28 at $39.86/bbl.
It is a very light day in terms of credit news beyond the macro environment. Monsanto dropped its roughly $46bln bid for Syngenta after the Swiss firm rejected a sweetened offer. Tiffany reported this morning missed its estimate due to the effects of a stronger dollar.
Another day passed without any new issuance in the primary market.
On the economic data: GDP (8:30 AM), Initial Jobless Claims (8:30)and Pending Home Sales (10:00AM) are due to be released today.
Municipal Bond Market
Munis were significantly weaker Wednesday for the second straight day. The markets focus was on new issue with the pricing of multiple deals including $2.5bln in NJ EDA debt. We should see attention switch back to the secondary today with the majority of this week’s deals already priced. The highlight of today’s calendar will be the pricing of the Chicago Parks district deal. The deal should allow investors to pick up some extra yield due to Chicago’s current turmoil. 30-day supply is slightly weaker this morning with $6.07bln on tap over the next 30 days versus $7bln yesterday.
Puerto Rico continues to be extremely quiet after the commonwealth announced that they would delay the pricing of $750mln in PRASA debt. We continue to see a below average amount of items for the bid with very bonds trading. Puerto Rico GO 8’s of 2035 saw one of the lightest volume days on record with only one trade of 4335m @ $70.875 (11.83%) after trading around $69 (12%) to start the week.
30-Day visible supply: $6.07bln
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