Friday, February 12, 2016

Corporate Bond Market
A decidedly firmer tone to the market this morning with global equities all up overnight and US Equity futures in the green to start (DJIA Fut +171, S&P Fut +22.5).  The catalyst seems to be a rally in oil, up to $27.92 last, as OPEC members signal cooperation on slowing output.  Treasuries are finally selling off a bit, with the yield on the 10yr at a 1.69% in early trading.   The Investment Grade Index has traded between -2.5 and -.5, with cash spreads slightly tighter (2-3bps).  High Yield cash trading better as well.  Yesterday we had sold off anywhere from .5 to 2pts.  This morning we are up .25 to .5pt.  

In credit news, Deutsche Bank detailed their plans for a debt buyback: Eur3bn and USD2bn across various issues.  The news should help restore confidence in the name.  Elsewhere, Boeing was making headlines as the SEC announced an investigation into Dreamliner accounting.  The new issue calendar in corporates remains non-existent until we can string together a few days of stability.  The deals are stacked up like planes into LaGuardia. 

In economic news, Import Price Index (8:30am), Retail Sales (8:30am), and University of Michigan Consumer Sentiment (10:00am) are due to be released today.  



Municipal Bond Market
Money was put to work in the municipal market yesterday as the strength in Treasuries drove dealers to clean up new issue balances right out of the gate.  Secondary follow through was strong during the morning as investors took advantage of offerings priced to the prior day’s scale.  Virginia Transportation Board priced a competitive deal on Wednesday and balances traded as much as 8bps higher yesterday morning.  Volatility in the Treasury market led to a more apathetic tone for municipals in the afternoon.  Puerto Rico 8’s traded between $69 and $69.75 yesterday.  Today is opening up very quiet as we prepare for the holiday weekend.

Visible supply stands at $6.5bn.



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