Wednesday, Sept. 9, 2015

Corporate Bond Market
The tone in the world equity market is firm this morning, as stocks overseas rallied led by the biggest jump (7.7%) in Japanese shares in almost seven years.  The driver appears to be optimism that governments in Asia will be able to stabilize financial markets. US equity markets are following with futures opening higher – DJIA +175 and S&P +18.75. The treasury market is off again this morning, with the yield on the 10 yr last 2.22%, and credit is openingup with the investment grade index 77 ½- 78. Oil is down $0.58 at $45.34/bbl.

The headline this morning is the ouster of United Continental Holdings CEO and two lieutenants as federal investigators probe the airline’s ties to the former chairman of the Port Authority of NY and NJ.

We saw $13.6bln in new issue hit the market yesterday; as expected there appears to be a backlog of deals and a desire to get something done ahead of a possible rate hike. Mitsubishi 3yr and 5yr, Goldman Sachs 5yr, Home Depot 2 yr and 10 yr, Santander 10 yr and 30 yr, ADT 5 yr and 10 yr, AES 30 yr FMB , Canadian Pacific Railway 20yr and 100 yr, Keycorp 5 yr, Deere Capital3,5,10 yr. For the most part all issues are trading slightly better this morning.

Economic data: MBA Mortgage Applications (7:00 am) and JOLTS Jobs Openings ( 10:00 am).


Municipal Bond Market
Munis are weaker for the second straight day as we continue to look to Treasuries for direction. The focus today will be on the secondary market with only $3.7bln scheduled in new issuance.  We continue to see very little interest in the market as funds continue to face substantial amounts of outflows and wait on more news out of Puerto Rico. 30-day supply is slightly stronger this morning with $8.22bln on tap over the next 30 days versus $7bln to start the week.

PR trading was extremely light to start the week as the market waits on the unveiling of a stability plan on Wednesday.   PR GO 8s of 2035 traded as high as $76.25 (10.95%), compared to trading @ 71(11.64%) in late August.  We expect to see PR paper sit around these levels until we see some clarity.  

30 Day visible supply: $8.22bln