Monday, Oct. 5, 2015

Corporate Bond Market
The bond market shows traders see only an 8% chance that the FED will raise interest rates at its October meeting, following the weaker than expected employment growth numbers released on Friday.  The US Treasury note fell for the first time in six days this morning, with the 10yr at 2.015%.  Credit is up with the IG index  -1.23 BPS this morning at 90 ¾-91 ¾.  Oil is up in early trading at $45.86/bbl.  Stocks in Europe are up today and US equity index futures are up (-DJIA + 105 and S&P +13).

Glencore PLC, one of the world’s largest commodity traders, was much in the news last week; it’s stock is up today after several analysts stated that the company has sufficient liquidity and still has positive equity value.  In other corporate news, Nelson Peltz’s Trian Fund has acquired a $2.5 billon stake in General Electric Co. as it backs the company’s focus on industrial businesses.

There were no new issues done Friday but $15-$25 billion is expected this week.

Economic data: Markit US Composite and Service PMI (9:45am), ISM Non-Mfg Composite and Labor Market Conditions Index (10:00am).


Municipal Bond Market
Munis rallied Friday after the release of weaker than expected employment data.  Attention will be on the primary this week with one of the largest calendars we have seen in a while.  New issuance is scheduled to be $8.7 billion highlighted by $2 billion dollar deals from the Port Authority of NY/NJ and the Chicago O’Hare International airport.  Muni funds reported outflows of about $250 million last week, which should put a little pressure on the secondary with such a large calendar.  30-day supply is stronger this morning with $15 billion on tap over the next 30 days versus $14 billion Friday.

PR trading remains extremely light as we continue to wait on more news out of the island.  The most active trading remains in GDB, PRASA, COFINA and GO paper with very few PREPA trades over the past week.  We continue to see very little trading benchmark GOs.  3mm 8’s of 2035 traded @ 74.625 (11.25%) on Friday.

30-Day visible supply: $15bn


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