Corporate Bond Market
Global equities are mixed this morning as another slew of earnings hits the tape and China growth prospects seem to be on the backburner for now. So far all the numbers look good, with a big beat from General Motors leading the charge. US Equity futures are up at the moment (DJIA Fut +66, S&P Fut +9.00). Overseas, Europe is up slightly, Euro Stoxx is +0.58%, Asia equities are all up, the NIkkei is +1.91%, and the Hang Seng +0.02%. Treasuries are rallying across the curve with the 10yr last at 2.051%. Oil is trading at $45.82 and gold is actually up a little bit to start. The IG index is opening a touch better at 80.4/80.9. Cash spreads are probably unchanged walking in.
The focus of the primary market yesterday was a multi-tranche deal from Fedex. Nat Rural also came to market with $750 million two-tranche deal, 5yr and 10yr.
On the economic data front, MBA Mortgage Applications due out today.
Municipal Bond Market
Munis are stronger this morning after a weak performance yesterday. We continued to see the market focus on the primary with the pricing of about $800 million in CA ST GOs and $300 million in OH ST GOs. This trend should continue as funds face inflows and are forced to put cash to work. In credit news, the state of NY won a $550 million settlement vs. large tobacco companies from a decade long dispute. Tobacco credits rallied on the news with hopes that more states will win older law suits. We should see tobacco to continue to rally here with very few alternatives in the HY space at the moment. 30-day supply is slightly weaker this morning with $9.6 billion on tap over the next 30 days versus $11 billion yesterday.
PR debt remains unchanged as the market awaits more color on restructuring talks on both GDB and PREPA debt. We should see PR debt remain at these levels until it seems more likely that either of these deals will be finalized. PR benchmark 8’s of 2035 traded as high as @ $74.50 (11.23%) after trading around $74 (11.23%) for most of last week.
30-Day visible supply: $9.69bn
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