Tuesday, April 26, 2016

Corporate Bond Market
US Equity Futures are strong to start the session with the DJ Futures +50 and the S&P Futures +5 this morning. The global tone is positive; all overseas equities up through the overnight with European and Asian markets all in the green. Oil is up to $43.17 this morning and rates are unchanged with the 10yr Treasury last at 1.91%.  Credit is firm with the Invest Grade Index slightly weaker at 73.5/74.25 this morning while cash is a bit lower as well.

In credit news, IG priced $12.6bn yesterday in new issuance while spreads continued to tighten. Secondary TRACE volume tallied for $15.2bn; 144A $2.3bn. In HY, 3 deals for $3.8bn priced yesterday as the market waits for BoJ and the Fed meetings. HY spreads, yields, and prices were all stable to fairly unchanged.   

In the news, Nabors, Procter & Gamble, and T Rowe Price all outperformed analysts’ estimates for Q1 earnings. Some big names that are set to release their profits after market close today are: T-Mobile, Waddell & Reed, Office Depot, Hershey, eBay, Twitter, Acadia, Hershey, Apple, US Steel Corp, AT&T, and Capital One.

In economic data, the US Conference Board will be announcing the Consumer Confidence update. Following, the US will be will be releasing totals on US Durable Goods New Orders Industries.


Municipal Bond Market
Munis were unchanged to the start the week as the market prepares for a large slate of new deals.  We saw aggressive selling of the front end as end accounts raised cash to put to work in some of the longer yieldier deals coming this week.  The order period will being today for the weeks largest deal ($2bn from Ascension Health).  The deal is going to be met with extremely strong demand and is already oversubscribed in longer maturities.  In addition, there are numerous micro deals under $100mln coming to market today which should provide smaller accounts and opportunity to put some state specific money to work.  30-day supply is stronger again this morning with $13bn scheduled over the next 30 days versus $12bn on Monday.

In credit news, S&P downgraded Children’s Trust fund tobacco bonds to BB from BBB- after they were included in the PR debt moratorium.  We continue to see a slight pullback in the name but nothing substantial.  PR 8’ of 2035 are facing pressure again after stabilizing in the $67 area. Bonds traded on Monday @ $66.25 (12.74%)

30-Day visible supply: $13bn