Friday, Nov. 6, 2015

Corporate Bond Market
Global equities are off this morning  as the foreign exchange market was in the news as the US dollar gained against all but 2 of its 16 major peers. US equities are down this morning with the DJIA +17 and S&P +0.75.  Oil is up a t$45.41/bbl.  US treasuries are unchanged this morning ahead of the payroll number to be released at 8:30.  The US treasury 10yr is at 2.231%.  Credit is unchanged this morning with the IG Index at 78/78.5.

Tullett Prebon Plc is in discussions to buy ICAP Plc’s voice brokerage business, giving it more scale to reduce costs in a shrinking market.

Yesterday was a large day for issuance in the IG primary market led by a five tranche $7.5 billion Halliburton deal. All tranches are trading better this morning. Other names in the market included Westar Energy, Alexandria Real Estate, and Shell.  Citigroup came with a  junior subordinate perpetual fixed-to-float with a 5yr non-call at 6.125%.  The back end is 4.478%.

Economic data: Payrolls(8:30am) and Consumer Credit (3:00pm).


Municipal Bond Market
Overall muni flows were dominated once again by primary market issuance.  $500 million MA Trans (Aaa/AAA) came to the market and saw slight re-pricing 1-2bp lower in yield on most maturities.  Competitively, Met Atlanta Rapid Trans Authority (MARTA), Aa2/AA+/AA-, brought $182 million to the market and saw 15yr paper priced at 20bps spread to the AAA curve. 

Secondary flows were driven by an increased amount of customer bid wanted as customer bid wanted volumes were 136% of the three-month moving average.  Large institutional investors were both pricing portfolios and raising cash ahead of the employment situation today.  Munis outperformed Treasuries again as the MMD curve saw higher yields by 1bp for most of the curve.  MMD/UST ratios dropped in the front end again as the 2yr ratio declined to 71%, while the rest of the curve remained unchanged at 74%, 93% and 103% for the 5, 10, and 30yr ratios, respectively. 

30-day visible supply was relatively unchanged and stands at $7.15 billion today.  Puerto Rico 8%s of 2035 traded slightly higher yesterday as $3 million went away to a customer at $73.25.  We expect secondary activity to remain quiet ahead of the employment situation at 8:30am EST.  


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