Monday, Nov. 9, 2015

Corporate Bond Market
With the exception of the Nikkei, global stocks are off this morning.  The Stoxx -0.3% and Hang Seng -0.61% as Chinese trade data showed weak demand.  It looks like the US equity market will open lower DJIA fut -50 ,S&P -7.25.  The payroll numbers released Friday morningwere much better than expected and the US treasury market sold off.  Treasuries this morning are down with the 10yr at 2.338%.  The market thinks that the Fed will raise interest rates in December.  Oil is trading higher at $44.85/bbl.  Credit traded off on Friday and is wider as we open with the UIG Index +.5 79.75/80.25.

There was no issuance in the IG primary market of Friday but hearing that there will be at least six deals coming today.  Only Labor Market Conditions Index this morning at 10:00am.


Municipal Bond Market
The municipal market saw healthy cuts as market participants are adjusting to an increased chance of a December Fed liftoff post non-farm payrolls.  We saw aggressive cuts in the front end of the curve immediately after the number was released and that continued throughout the day.  Bids in the street faded quickly and dealers were reluctant to sell into these bids.  Bid-wanted activity was light all day as the market digested the economic data.  2yr munis underperformed versus treasuries as the ratio increased from 71% to 74%.  5, 10, and 30yr ratios remain unchanged at 74%, 93% and 103%, respectively.  Munis remain relatively rich to treasuries and we look for more normalizing over the next few weeks.

30-day visible supply increased to $8.9 billion from $7.15 billion.  The SLGS window was reopened on November 3rd and this should increase the amount advance refunding we see as we near the end of the calendar year.


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