Wednesday, Dec. 2, 2015

Corporate Bond Market
European stocks are closing down today. They were up earlier on inflation data that was lower than estimates, which may lead to continued monetary stimulus by the European Central Bank. After yesterday’s rally led by healthcare shares, futures are down slightly this morning (DJIA -24 and S&P -1.50).  Oil is down this morning $.51/bbl to $41.33/bbl.  After yesterday’s 3 basis point tightening, credit is wider by 1bp this morning at 80.2/81.7.  US treasuries are down across the curve with the ten year at 2.162%.

US new car sales in November continued on a pace that may challenge the 17.35 million sales peak reached in 2000.  Facebook’s Zuckerberg said that he would give away 99% of his shares in the company over the course of his lifetime.

The new issue IG market was slower than yesterday with just seven deals done but it amounted to $19.65bn. Names in the market included: Expedia, Synchrony, Rodgers Communications, Wisconsin Public Service, Ambro, Citi, and Georgia Power.

Economic data: MBA Mtge. Applications (7:00am), ADP Employment (8:15), Nonfarm Productivity(8:30am), ISM NY (9:45am), and Beige Book(2:00pm).


Municipal Bond Market
Munis are weaker this morning after a strong performance on Tuesday.  The market focused on the primary with the majority of customers putting money to work in new deals.  The highlight of the day was the pricing of $306mln University of MI bonds which were oversubscribed on the long end with 5’s of 2046 priced @ 3.04%.  New issue continues to allow customers to pickup yield versus the secondary we expect to continue to see strong demand for new deals.  30-day supply is weaker this morning with $9.53 on tap over the next 30 days versus $11bn Monday.

PR paper rallied after the commonwealth made payments on both GDB and commonwealth guaranteed debt.  Benchmark 8’s of 2035 traded as high as $75.00 (11.168%) after trading around $73.00 (11.49%) last week.  The market will now look ahead to January 1st when the island faces a large payment on GO debt.

30-Day visible supply: $9.3bn


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