Corporate Bond Market
European stocks are up today for the first time in six days (Stoxx +2.33%) and US equity index futures advanced as credit markets sold off and crude oil retreated (DJIA +124 and S&P+14.50). Oil rallied yesterday after slumping to its lowest level since 2009 and is opening up today +$22/bbl at $36.52/bbl. Natural gas extended its losses after the close on Monday after weather forecast showed a continuation of higher than average temperatures this month. US Treasuries are down this morning on the probability that the Fed will hike interest rates on Wednesday, currently reported as 76% according to Bloomberg. The 10yr US treasury is 2.246%. Credit is opening tighter this morning with the IG Index -2 at 90.15/91.15.
There was no issuance in the IG primary market yesterday and not a lot is expected ahead of the Fed on Wednesday.
Economic Data: CPI (8:30am), Real Avg. Weekly Earnings (8:30 am), and TIC Flows (2:00pm).
Municipal Bond Market
Munis are weaker this morning for the second straight day as we continue to see very little demand ahead of the head. Liquidity was scarce in the secondary with the majority of buyers looking to put cash to work later in the week. New issuance remains nonexistent this week with only about $2bn expected. 30-day supply is unchanged this morning with$4.3bn on tap over the next 30 days versus $4.3bn on Monday.
PR paper was quiet again as the market continues to await January payments. We saw the selloff in HY flow into the muni market with Benchmark GO 8% of 2035 trading as low as $73 compared to $75 last week.
30-Day visible supply: $4.3bn
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