Wednesday, April 6, 2016

Municipal Bond Market
Munis looked to Treasuries for direction on Tuesday rallying across the curve. We saw extremely strong demand for long end paper, with maturities outside of 20 years outperforming the rest of the curve.  Demand flowed into the secondary for the first time in about a week with extremely aggressive bids on most BW situations.  We expect focus to shift back to the primary this morning as some of the weeks largest deals begin to price and customers receive allocations on deals from Tuesday.  30-day supply is weaker this morning with $9.4bn scheduled over the next 30 days versus $10.4bn Tuesday.

In credit news, the house of Representatives has passed legislation that would declare a moratorium on PR debt.   This is obviously credit negative for all debt sectors.  We have not seen any trades this morning but expect GOs to be down significantly on the news.   Benchmark GO 8s of 2035 continue to fade with bonds trading @ 66.00 (12.784%), after trading around $69 last week.  

30-Day visible supply: $9.49bn

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