Friday, January 29, 2016

Corporate Bond Market
Firm tone to global markets this morning as Japan’s central bank voted to adopt a negative interest rate policy.  European Equities are all up 1-1.5%, and Asian equities all up 2-3%.  Stateside futures up across the board (DJIA Fut +142, S&P Fut +16.25).  The treasury market is rallying aggressively on the back of the BOJ decision as well, and the yield on the 10yr is now down to 1.916%.  Oil continues to nudge upwards, last at $33.70.   Credit is unchanged to slightly tighter to start with HY Cash up .5pt to 1pt.   Recently issued preferreds continue to outperform, up .20-.30 in a day.

Earnings continue to dominate the credit headlines.  Xerox is on the tape this morning with a slight miss and news they will be splitting into two publicly traded companies. 

In economic news,  GDP (8:30am), Personal Consumption (8:30), Employment Cost Index (8:30am), Chicago Purchasing Manager (9:45am), University of Michigan Consumer Sentiment Index (10:00am) are due to be released today.


Municipal Bond Market
Munis are stronger this morning after another quiet trading day in the secondary market.  We have seen extremely light volume for most of the week as buyers remain hesitant to put money to work at these levels.  Munis continue to receive new cash as $594mln flowed into funds, which brings us to 17 straight weeks of inflows.  New money should continue to flow into the primary market as we have seen for most of 2016.  30-day supply is stronger this morning with $8.5bn on tap over the next 30 days versus $5.6bn on Monday.

PR trading remains extremely light as we head into today’s meeting between the commonwealth and creditors.   The island is expected to present a potential debt restructuring plan to creditors.   Benchmark 8s continue to trade @ $71.50 (11.93%) after trading around $70 earlier in the week.

30-Day visible supply: $8.5bn


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