Wednesday, Nov. 18, 2015

Corporate Bond Market
European and emerging market stocks are lower today as investors cautiously await the release of minutes from the Fed’s last policy meeting, with the expectation that there is mention of  amid signs of slowing global growth (Stoxx -0.69%)  US equities look like they will open higher with futures up in early trading (DJIA +29 and S&P +2.50).  Oil has advanced after US industry data showed that crude stockpiles declined; presently up $0.66 at $41.34/bbl.  Credit is slightly wider this morning with the IG Index -.75 82.5/83.  Treasuries are opening this morning flat with the 10yr at 2.269%.

France’s Air Liquide agreed to pay $10.3 billion for US-based Airgas in an all-cash deal at a 29% premium over where the stock closed on Monday.  Canadian Pacific sent a letter to Norfolk and Southern outlining a proposal to combine the railroads.

Just a few deals in the primary market yesterday; Prudential, Ameren, Ally, Westpac, Societe Generale, and Novartis came with a benchmark 10yr and 30yr.

Economic data: MBA Mtg. Applications (7:00am), Housing Starts and Building permits (8:30am), and Fed Minutes from last meeting (2:00pm).


Municipal Bond Market
Munis finished stronger on Tuesday as the market continues to digest this week’s $10 billion in new issuance.  We saw about $4 billion in new issuance on Tuesday which was met with extremely strong demand.  The highlights of yesterday’s calendar were $744 million MA Building Authority, $626 million NJ Transit Authority, and $650 million CT GOs which were all oversubscribed.  The market continues to have very little appetite for the secondary with few bidders and not many items trading.  30-day supply is weaker this morning with $7.7 billion on tap over the next 30 days versus $11 billion Tuesday.

PR trading remains nonexistent as the market waits on more color out of the Island.  We continue to see zero demand for any type of PR paper.   PR benchmark 8’s of 2035 traded @ $71.25 (11.78%) on Monday after trading around $71.75 (11.68%) last week.

30-Day visible supply: $7.7bn


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