Monday, Oct. 19, 2015

Corporate Bond Market
Global equities are up across the board as investors look at corporate earnings optimism and China growth data is off but not as much as expected.  The US market may not follow today, as futures are down this morning (DJIA -39 and S&P -5.25).  Credit is weaker this morning with the IG Index +75.  The yield on US Treasuries is unchanged at 2.033%.  Oil is down this morning $0.81 to $ 46.43/bbl.

Earning season will be in full swing this week.  MS reported profit that missed analyst estimates as fixed income trading revenue declined and investment management fees dropped by more than half on an Asian private equity loss.

$20-$25 billion of new issue is expected this week.  Citigroup has announced a deal this morning, a benchmark 5yr fixed and/or floating.

Economic data: Housing starts (8:30am) and Building permits (8:30am).


Municipal Bond Market
Munis are unchanged this morning after a quiet close to the week.  We expect to see very similar flows compared to what we saw last week as funds continue to put cash to work in the primary with $7.9 billion in new issuance scheduled.  Muni funds received $520 million in new cash last week.  Highlights of this week’s calendar will be $1 billion NYC TFA, $750 million NJ Turnpikes, $520 million CA ST GO, $370 million Tacoma WA to name a few.  30-day supply is unchanged this morning with $11 billion on tap over the next 30 days versus $11 billion yesterday.

PR debt is unchanged as the market remains skeptical about both the possibility of a treasury issued super bond and the governors control board.    We should see PR debt remain at these levels until it seems more likely that either of these deals will be finalized.  PR benchmark 8’s of 2035 traded as high as @ $74.50 (11.23%) after trading around $74 (11.23%) for most of the week.

30-Day visible supply: $11.03bn


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