Friday, April 29, 2016

Corporate Bond Market

US Equity Futures are down to start the day with the DJ Futures -14 and the S&P Futures -3 this morning. Overseas equities are mixed through the overnight European markets weaker and Asian markets mixed.  Oil is up to $46.43 this morning and rates are down with the 10yr Treasury last at 1.84%. Credit is firm with the Invest Grade Index is weaker at 76.25/77.25 this morning while cash is slightly stronger.

In credit news, $5.75bn priced yesterday in new issue IG. A total of $132.4bn priced in April. In HY, $1.275bn priced yesterday bringing the monthly volume to $27.455bn.

In the news: Acadia, Amazon, Cliffs, ConocoPhillips, Dow Chemical, Ford, and Genworth outperformed their respective Q1 earnings projections. Some big names that missed on analysts’ estimates are: Charter, CIT, and Marathon. Keep a look out for: Calpine, Chevron, Exxon, Legg Mason, Moody’s, and Phillips. All are set to release their financials to close the month.

In economic data, the dollar dropped to an 11-month low sending commodities to their highest levels since 2010. The US will be announcing the US Personal Consumption Expenditures and Income. Following, the Bureau of Labor will release the updated Employment Cost Index.

Municipal Bond Market   

Munis are unchanged this morning after rallying across the curve on Thursday.  We saw extremely strong in the secondary for the first time in weeks.  The most aggressive buying was on the long end with most of this week’s new deals trading up about a point.  The market is starved for yield right now with yieldier deals receiving the most attention. Muni funds continue to face inflows with $1.7bn in new cash versus inflows of $550mM last week.  These numbers create significant demand for the primary next week and should lead to deals coming up to 3x oversubscribed. 30 day supply is stronger this morning with $13bn on tap over the next 30 days versus $10bn Thursday.

 PR trading remains light as we approach May 1st debt payments on the island, which includes $422mM in GDB debt.  At this point, the market is mostly full on PR paper and positions are already in place.  GOs continue to fade with benchmark 8’s of 2035 1mm trading @ $64.97 yesterday.   

30 Day visible supply: $13bln


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