Monday, Dec. 7, 2015

Corporate Bond Market
European equities are up this morning across the board (Stoxx +1.86%).  US equity futures are up (DJIA +31 and S&P +4.75).  US treasuries continue their  decline with the ten-year at 2.280%.  Oil traded through $40/bbl and is at $39.35/bbl.  OPEC declined to limit its output at last week’s meeting.  Credit is unchanged at 81.65/82.15. Iron ore sank below $40 per metric ton on low-cost supply from the world’s top miners.

Electrolux fell during Friday trading, when General Electric abandoned plans to sell its appliance business to the Swedish manufacturer for $3.3bn because of opposition from US antitrust regulators.  Coffee giant Keurig Green Mountain has agreed to be acquired by an investor group led by JAB Holding Co. for about $13.9bn.

Only one deal came to market on Friday: Mylan did 3yr and 5 yr at +180 and +205 respectively.

Economic data: Labor Market Conditions (10:00am) and Consumer Credit (3:00pm). 


Municipal Bond Market
Munis are unchanged this morning after rallying on Friday.  The market will remain focused on the primary for the third straight week with about $9.5bn in new issuance scheduled.  Munis continue to see new cash flowing into funds and we continue to see more attractive opportunities in the primary versus the secondary market.  Highlights of this week’s calendar include $1.14bn from the Empire State Development, $385mln Indiana Municipal Power Agency bonds, and $266mln NJ Health care facility bonds.  Muni funds recorded inflows again with $364mln in new cash.  30-day supply is unchanged this morning with $9.9bn on tap over the next 30 days versus $9.4bn Thursday.

The market continues to show demand for PR paper after the commonwealth made December debt service payments.  Benchmark 8’s of 2035 continue to trade around $75.375 (11.10%) after trading around $75.00 (11.15%) earlier in the week.  We expect to see volume decline leading up to January debt payments. 

30-Day visible supply: $9.9bn


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