Thursday, April 21, 2016

Corporate Bond Market
US Equity Futures are slightly stronger to start the session with the DJ Futures +5 and the S&P Futures +1 this morning. Overseas equities are down through the overnight with European and Asian markets both in the red. Oil is down to $44.13 this morning and rates are weaker with the 10yr Treasury last at 1.866%. Credit is firm with the Invest Grade Index unchanged at 72/73 this morning while cash is also unmoved.

In credit news, yesterday’s IG issuance totaled $6.65bn. In HY, yields fell to YTD while prices rose to match early November levels.  

In the news, GM posted first-quarter profits of $2bn, blowing away analysts’ estimates. The US’ biggest automaker led record results in North America while proving to be competitive across the globe. American Express and Raymond James also beat projections showing a strong quarter. BNY Mellon and BB&T are set to release their earnings after market close today.      

In economic data, the Chicago and Philadelphia fed will be speaking on national activity and business outlook respectively. The Department of Labor will be releasing the US Initial and Continuing Jobless Claims. Following, the FHFA will be announcing the US House Price Index later this morning.


Municipal Bond Market
Munis are weaker this morning after a mixed trading on Wednesday.  We saw aggressive buying across the curve to start the day, however, the bid side faded into afternoon trading.  Demand for new issuance remained strong for longer maturities with deals 3x-5x oversubscribed.  We continue to see weak demand for front end paper in both the secondary and the primary.  The highlight of the primary today will be the pricing of $130mln New Brunswick NJ Parking Authority Bonds.  The deal should be extremely well received with very few options outside of appropriation debt in NJ right now.   30-day supply is weaker this morning with $10.63bn scheduled over the next 30 days versus $11bn on Wednesday.

In credit news, PREPA came to an agreement with bondholders to extend negotiations until April 27th.  At this point, the extension was expected and will have no pricing impact on PREPA debt.   PR benchmark 8’s continued to trade in the mid $60s with 5mm bonds trading yesterday @ $67.00.

30 Day visible supply: $10.6bn


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