Wednesday, April 20, 2016

Corporate Bond Market
US Equity Futures are up to start the session with the DJ Futures +6 and the S&P Futures +3 in early trading. The positive global trend continues through the overnight as all overseas markets are up except London.  Oil is slightly lower to $40.34 this morning and rates are unchanged with the 10yr Treasury last at 1.78%. Credit is firm with the Invest Grade Index wrapped around 76 this morning while cash is unchanged.

In credit news, today is expected to be another heavy in new issuance. Yesterday’s IG issuance totaled $11.1bn and April’s IG issuance now $96.6bn, YTD $555bn; YTD sans SSA $442bn. MTD HY issuance is up to $18.89bn and YTD $55.955bn. Of the new issues, we were active in ALTICE, AMCOR, ARGENT, and MITSUBISHI.

In the news, American Express and Raymond James are set to release their Q1 earnings after market close today.

In economic data, the U.S. MBA announced this morning that the Mortgage Applications Index Rose 1.3% last week. Existing home sales will be announced later this morning.


Municipal Bond Market
Munis feel firmer this morning for the 3rd straight day.  The market was focused mostly on the primary yesterday with order periods for some of the weeks largest deals including $1.5bln CA St GOs.  We should see demand in the secondary today as customers and dealers receive allocations and asses what kind of cash is left over. We continue to see extremely strong demand for the off the run names that provide a little extra yield.  Customers seem to be full of the typical names floating around and looking for different opportunities to put cash to work.   30 day supply is weaker this morning with $11.36bln scheduled over the next 30 days versus $12bln on Tuesday.

In credit news, Governor Padilla is attempting to go after revenue securitized in the Islands tobacco bonds.  This would completely undermine that contractual obligation of the deal and is viewed as such a long shot that we should not see much price movement.   PR benchmark 8’s continued to trade in the mid $60s with 3mm bonds trading yesterday @ $67.50 yesterday.

30-Day visible supply: $11bln


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