Wednesday, October 12, 2016

Corporate Bond Market

US Equity Futures are down to start the day with the DJ Futures -24 and the S&P Futures -2.50. Overseas equities are mixed through the overnight with European equities mixed and Asian equities weaker. Oil is stronger, last at $51/ barrel and rates are down with the 10yr Treasury last at 1.794%. Credit is wider with the Invest Grade Index showing 69.16/69.82 and cash is also weaker.

In credit news, yesterday’s primary market saw 7 deals just north of $9bn priced in Investment Grade Credit. Sumi Trust is expected to bring a 3yr fxn/frn deal later today. A couple of other names on the calendar are: KfW, KEB Hana, Lions Gate Entertainment, and WMG.

In economic data, FOMC Meeting Minutes from Sept. 20-21 will be released this afternoon. MBA Mortgage Applications dropped 6% last week and August’s tally of Job Openings with be reported later this morning.

Municipal Bond Market

Munis continued to face pressure on Monday as the market prepares for about $8bln in issuance this week.  This size calendar is extremely large for a shortened week and should lead to some sloppy trading due to current market conditions.  We continue to see a substantial amount of items out for the bid with very little liquidity. It seems as if market participants are hesitant to hit bids at this point. Supply is significantly stronger this morning with $18bln on tap over the next 30 days versus $14bln on Tuesday.

PR trading picked up on Tuesday after a GO vs. Cofina lawsuit was announced.  PR GO 8s are up 2-3pts after the news while cofina paper traded down about a point. Insured paper remains the focus, with a variety of customers now buyers of the credit.  

30 Day visible supply: 18bln