Tuesday, October 11, 2016

Corporate Bond Market

US Equity Futures are down to start the session with the DJ Futures -38 and the S&P Futures -4. Overseas equities are mixed through the overnight. Oil is weaker, last at $50.86/ barrel and rates are also weaker with the 10yr Treasury last at 1.771%. Credit is firm with the Invest Grade Index showing 67.34/68 and cash is also stronger.

In credit news, last week’s primary market saw $14.7bn priced in Investment Grade Credit and $3.5bn in High Yield. We are expecting a light week in new issuance resulting from the short week with volume not expected to exceed $20bn. There are deals from: Phillips, KEB Hana, and SMBC.

In economic data, September’s Labor Market Conditions Index Change will be announced this morning.

Municipal Bond Market

Munis are weaker this morning for the 7th straight day as the market continues to look to tsys for direction.  We saw extremely sloppy trading last week with the 30yr AAA muni down about 15bp.  Liquidity has been scarce with very few bidders across all maturities and sectors.  Dealer balance sheets seem heavy at the moment with most desks drowning in deals that have come to market over the past month.  This week’s calendar will continue to put pressure on the market with $8.5bln scheduled.  Supply is weaker this morning with $12.3bln on tap over the next 30 days versus $14bln on Friday.

PR trading remains light across most debt sectors with only the most active cusips receiving attention.  PR GO 8s are up 2-3pts on news of a lawsuit that will put GO bond holders vs.  COFINA bond holders. 

30 Day visible supply: 12.63bln