Thursday, Jan. 14, 2016

Corporate Bond Market
US Equity futures are up to start the day despite a sell-off in global stocks overnight (DJIA Fut +54, S&P Fut +6.75).  JP Morgan earnings were out first thing this morning and are helping the positive tone, beating expectations at 1.40 versus 1.27 eps.  The outperformance was attributed to lower litigation and employee compensation costs.  US Bank, Blackrock, Regions, Wells Fargo, Citigroup, and PNC earnings all due out tomorrow.  Treasuries are rallying this morning bringing the yield on the 10yr to 2.084%.  Oil is up at $30.82 having traded below that 30 level in Asian trading.  Credit is opening unchanged to slightly better, with the exception of European automakers which are once again under pressure as Renault is investigated over emissions.   The Investment Grade Index is currently 103.75/104.75 (-.25).

The primary market was the story yesterday as AB Inbev printed $46bn across the curve.  Though the deal came at a decent concession and saw $117bn in orders , it traded heavy as an aggressive equity sell-off coincided with the allocation process.  The Nippon Life 30nc10 also priced yesterday after being tightened 30bps from initial price talk.  The REGS tranche outperformed with Asian buying overnight.  That brings WTD issuance to $60.75bn.  We are hearing there are at least two deals on tap for today, no names yet.

In economic news,  Initial Jobless Claims (8:30am) is due to be released today.


Municipal Bond Market
Munis are unchanged this morning after another extremely quiet day in secondary trading.  We continue to see the market focus solely on new issuance with very few bidders and weak bids on BW items.  Even with such strong demand for the primary, we are seeing very few deals trade up after pricing. 30-day supply is unchanged this morning with $8.89bln on tap over the next 30 days versus $8.5bln Wednesday.

PR trading remains nonexistent as the market waits on more color out of the Island.  We continue to see very light demand for any type of PR paper.   At this point, customers have built their position and are now preparing for restructuring talks.  PR benchmark 8’s of 2035 traded slightly lower @ $71.72 (11.56%) on Wednesday after trading around $72.00 (11.67%) on Tuesday.

30-Day visible supply: $8.89bn


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