Friday, Sept. 18, 2015

Corporate Bond Market
European stocks are off today lead by declines in automakers and banks.  US stocks erased gains yesterday after the FED indicated that global developments overshadowed signs of strength in the US economy.  Equity futures are off this morning with the DJIA -148 and S&P -17.5.  The long awaited FMOC meeting and decision not to raise the fed funds rate has led to gains in worldwide bond markets.  Bonds gained from Australia to Germany, while Treasuries have advanced in this morning’s trading.  The US 10yr is up 10/32’s at 2.157%.  Oil is flat at $46.29/bbl.  Credit is better this morning with spreads tighter by 1 ¼ bps.

In corporate news, GM admitted to criminal wrongdoing and agreed to pay $900 million fine over mishandling of a defective ignition switch.  In the oil patch, Samson filed for Chapter 11, another victim of the energy industry slowdown.

No new issues in yesterday and only the leading index (10:00am) and Household net worth (12:00pm) for economic data to be released today.


Municipal Bond Market
Munis are stronger again this morning after rallying hard into the close, post FOMC decision.  We saw aggressive buying throughout the curve as buyers put money to work after sitting on the sidelines for most of the week.  We expect to see munis continue to rally this morning as the market looks to Treasuries for direction.  We could see some pressure on the muni market next week as funds continue to face outflows ($411mln this week) and new issuance picks up for the first time in two weeks 30-day supply is slightly stronger this morning with $7.5bn on tap over the next 30 days versus $6.6bn yesterday.

PR trading remains light as the market awaits more information on restructuring scenarios.  3mm PR benchmark 8’s of 2035 traded @ 75.00 (11.15%) after not trading around the same level on Wednesday.   We expect to continue to see very light trading in PR paper untilmore information comes out of the commonwealth.   

30-Day visible supply: $7.5bn


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