Monday, Oct. 26, 2015

Corporate Bond Market
European stocks are down today and US equity futures are off (DJIA -23 and S&P -4). Investors are awaiting China’s official growth targets as the nation begins its policy-setting meetings.  Stateside, US traders put the odds of the Fed raising rates by year-end at 36%.  US treasuries are opening up modestly with the 10yr at 2.074%.  Oil has traded off recently but is up $0.25 at $44.86/bbl this morning.  Credit spreads are wider this morning +.75 at 77.75/78.25.

Broadcom and Xerox are among the 10 S&P companies reporting today.  The WSJ is reporting this morning that profits and sales at big US companies are poised to show a decline for the first time since the recession.GM came to terms with the unions just before the strike deadline last night.

There were a couple of deals done on Friday in the new issue market. Royal Bank of Canada did a 5yr, Citigroup re-opened a 2027 sub note and First Horizon came with a 5yr. The morning Commonwealth Bank of Australia has announced this morning a benchmark 3yr fixed/float and 5yr fixed rate deal.

Economic data: New home sale (10:00am) and Dallas Fed Mfg. Activity (10:30am).


Municipal Bond Market
Munis are stronger this morning after selling off to close out last week.  We expect to see attention shift from the primary to the secondary this week as funds face $250 million in inflows versus $5 billion in new issuance.  Customers have used the primary as the main source of supply over the past three weeks as they continue to face inflows.  30-day supply is weaker this morning with $8 billion on tap over the next 30 days versus $11 billion yesterday.

PR debt rebounded after selling off mid week on news that the treasury was backing a bill that would provide chapter 9 bankruptcy protection all PR issuers.   PR benchmark 8’s of 2035 traded as low as @ $70.39 (11.93%) after trading around $74 (11.23%) on Wednesday.

30-Day visible supply: $8bn


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