Wednesday, Dec. 16, 2015

Corporate Bond Market
Finally the day has arrived where the Federal Reserve is set to raise interest rates for the first time in nearly a decade.  Fed officials have signaled a gradual pace of increases after liftoff, assuming the economy remains on asteady course.  European equities are up (Stoxx+.64%) and US futures are up as well this morning (DJIA +91 and S&P + 9).  Oil is down $0.26/bbl at $33.08/bbl.  US natural gas extended its decline as futures for next month fell 1.3% to $1.78 per BTU.  Credit is opening 0.5 tighter at 89.5/90.5 and the US Treasury 10yr is 2.284%.

There was no issuance in the IG primary market yesterday and none is expected today ahead of the Fed’s announcement.

Economic data: Housing Starts (8:30am), Building Permits (8:30am), Industrial Production (9:15am), Capacity Utilization (9:15am), and FOMC Decision (2:00pm). 

 

Municipal Bond Market
Munis are weaker this morning for the third straight day as we continue to see very little demand ahead of the fed.  Liquidity remains scarce as dealers and buyers sit on the sidelines until this afternoons meeting.  30-day supply is weaker this morning with $3.3bn on tap over the next 30 days versus $4.3bn on Tuesday.

PR paper was quiet again as the market continues to await January payments.  We saw the selloff in high yield 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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