Tuesday, Sept. 15, 2015

Corporate Bond Market
European stocks are flat this morning but the Shanghai composite dropped 3.5% to extend Monday’s 2.7% decline.  US stock index futures are little changed as investors await this morning’s economic data and Thursday’s Federal Reserve announcement on interest rates (DJIA +5 and S&P +.75).  Metals extended losses after reports showed weak industrial output in China.  Copper dropped 0.7% and zinc and nickel were off.  Oil is recovering after two days of losses and is at $44.42/bbl.  US treasuries are up across the curve with the long bond at 2.939%.  Credit is opening flat this morning.

There were a couple of deals brought yesterday in the IG primary market.  Disney came with a benchmark 3yr,5 yr and 10yr; St. Jude Medical did 3yr, 5yr and 10 yr; and Aviation Capital did a dual tranche 3yr and 5yr deal.  All the deals are trading up this morning.

Economic data: Retail sales (8:30am), Industrial production (9:15am)and Capacity Utilization (9:15am).


Municipal Bond Market
Munis are unchanged this morning after an extremely quiet start to the week.  Volume was light in the secondary as the market braces for this week’s FOMC meeting.  We expect to see this trend continue until after Thursday’s announcement.   This week’s new issue calendar kicked off Monday with the pricing of $162mln in Johnson County Kansas bonds.  Today should be quiet with buyers sitting on the sidelines and larger deals not pricing until Wednesday.  30-day supply is unchanged this morning with $8.6bn on tap over the next 30 days versus $8.7bn yesterday.

PR trading was nonexistent to start the week as the market waits for more news out of the island.  We saw very few BWs and almost no bidders on PR paper.   The clearest sign of a slowdown in PR trading was the fact that not one trade in the 8’s of 2035 was recorded on Monday.    PR GO 8s of 2035 traded as high as $76.25 (10.95%) on Monday of last week before trading as low as 72.875 (11.499%) to close the week.

30-Day visible supply: $8.6bn


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