Tuesday, Dec. 8, 2015

Corporate Bond Market
Oil prices fell to their lowest point in seven years yesterday and oil this morning is off $.20/bbl at $37.42/bbl.  Energy industry stocks and bonds were down in heavy trading.  European and Asia equities are down today as China’s slowing trade data highlight the global demand slump in foreign exchange reserves intensified concern of the potential depth of China’s economic slowdown (Stoxx -1.65% and Hang Seng -1.34%).  US futures are down this morning (DJIA -146 and S&P -18.25).  Treasuries are rebounding this morning with the ten-year at 2.211%. Credit is opening weaker this morning with the IG Index +1.6 at 81.1/81.6.

In corporate news, Fairchild Semiconductor said it has received an unsolicited proposal to buy the company.  Norfolk Southern Railway quickly rebuffed a revised bid to buy the company from Canadian Pacific.  Newell Rubbermaid and Jarden are in talks about combining the two makers of consumer products.

Several companies issued in the primary market yesterday: including National Bank of Canada, Marathon Petroleum, Ameren, Credit Suisse, Toronto Dominion Bank, and Macy’s.

Economic data: JOLTS Job Openings, IBD/TIPP Economic Optimism (10:00am). 


Municipal Bond Market
Munis are unchanged this morning after mixed trading on Monday.  The muni curve continues to flatten with extremely light demand for the front end of the curve.   The most dramatic pricing changes will be seen in the primary with the majority of this week’s deals coming with sealed bids on the front end and substantial demand for longer maturities.  30-day supply is mostly unchanged this morning with $9.65bn on tap over the next 30 days versus $9.9bn Monday.

PR demand was light to start the week as the market continues to digest news coming out of PREPA.  We have seen extremely light trading in the credit as the market awaits clarity from the power provider.  Benchmark GO 8’s of 2035 did not trade institutionally on Monday after trading around $75 Friday.  We expect to see volume decline leading up to January debt payments. 

30-Day visible supply: $9.65bn


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