Thursday, Sept. 24, 2015

Corporate Bond Market
It looks like equities will continue their sell off today.  Both the European and Asian equity markets are down today.  US equity futures are DJIA -141 and S&P -16.50 and US Treasury 10yr note yields are up this morning by 10/32’s at 2.114%.  Credit is weaker this morning with the IG index up 2 basis points to 82.4/83.4.  Oil is up slightly in early morning trading to $44.63/bbl.  The rig count is 56% below the comparable period last year, 54% below the five-year seasonal average and 49% below the five-year seasonal low from 2010.

Fallout from the Volkswagen emissions cheating scandal continued with the resignation of the CEO yesterday and rumors that BMW diesel cars may have similar issues. Bankruptcies and closures are sweeping across the oil patch, with dozens of hydraulic-fracturing companies at risk as oil remains under $50 a barrel.

Yesterday saw $7.7 billion of new issue bringing the total for the month to $94.5 billion.  Notable issuers were Sysco 5yr, 10yr and 30yr; JPM 12yr subordinated note; and Citi 12yr subordinated note.

Economic data today: Claims, Durable Goods Orders, Ex-Transportation, Orders and ship Nondefense EX air(8:30am), Bloomberg Consumer Comfort (9:45am), New home sales( 10:00am)  Kansas City Fed. Mfg activity (11:00am).


Municipal Bond Market
Munis were extremely quiet yesterday with very light trading throughout the curve.  The largest deal of the week, NYC TFA performed extremely well during the first day of trading.  Most maturities traded up 3 basis points with some trading up as much as 5 basis points.  We expect to see demand in the secondary this morning with the majority of the weeks new issuance wrapped up.  30-day supply is slightly weaker this morning with $6.2 billion on tap over the next 30 days versus $7 billion yesterday.

PR trading remains extremely light as the market awaits more news out of the commonwealth.  PR debt was unchanged after PREPA announced that it had reached an agreement with fuel lenders.  Benchmark GO 8’s of 2035 continue to stabilize in the mid $70s with 5mm bonds trading @ $74.75 (11.195%).

30-Day visible supply: $6.2bn


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