Thursday, April 28, 2016

Corporate Bond Market

US Equity Futures are weak to start the day with the DJ Futures -125 and the S&P Futures -12.50 this morning. The BoJ’s announcement to postpone adding stimulus to their struggling economy threw markets off quite a bit. The Yen gained strength while stocks fell. Overseas equities are mixed through the overnight European markets down and Asian markets mixed.  Oil is up to $45.36 this morning and rates are down with the 10yr Treasury last at 1.85%. Credit feels firm with the Invest Grade Index is weaker at 74.5/75.5 this morning while cash is slightly stronger.

In credit news, there was no activity IG or HY new issuance, leaving IG MTD at $126.65bn and HY MTD at $ $26.18bn. A total of $105bn is expected to be priced in April. In HY, yesterday’s spreads were stable as yields moved lower and prices rose. April’s total new issuance is expected to hit $29bn. $4.476bn.

In the news: Facebook, NASDAQ, Hess, Marriot, NASDAQ, and Carlyle Group beat analysts’ estimates while Paypal underperformed in 1Q earnings. Some companies to look out for that are set to release their revenue today are: Acadia, CIT, Cliffs, Colgate, ConocoPhillips, Dow Chemical, Ford, LinkedIn, Marathon Oil, and Viacom just to say a few.

In economic data, as expected, the Fed has left interest rates unchanged and signaled a possible rate hike in the coming months. For today, the US will be announcing 1Q GDP the Department of Labor will be releasing the US Initial and Continuing Jobless Claims. The Kansas City Fed will also be reporting on April’s Manufacturing Activity.

Municipal Bond Market   

Munis are stronger again this morning as we continue to see demand across the curve.  Secondary volume picked up yesterday as customers began to receive allocations on new deals from earlier in the week.  Retail buying into month end seems to be the most active it has been in months with tax season finally wrapping up. We expect to see secondary trading overshadow the primary today as customers attempt to put remaining cash to work with limited supply. 30 day supply is stronger this morning with $10bn on tap over the next 30 days versus $9bn Wednesday.

PR trading remains light as the market continues to digest news coming out of the island.  The GDB is currently negotiating with bondholders to pay about 53 cents on the dollar for outstanding GDP debt.   This is extremely positive for anyone involved in the name over the past few months with some bonds trading around $23.00.  We continue to see very little demand for PR benchmark 8’s of 2035. Bonds traded as low as $65 yesterday after trading around $68 last week.  

30 Day visible supply: $10bn

This communication is for informational purposes only.  It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.  All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice.  
Any comments or statements made herein do not necessarily reflect those of R. Seelaus & Co., Inc. its subsidiaries and affiliates.  This transmission may contain information that is privileged, confidential, legally privileged, and/or exempt from disclosure under applicable law.  If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is STRICTLY PROHIBITED.