Corporate Bond Market
US Equity Futures are up for the second day in a row with DJ Futures +64 and the S&P Futures +7.25 this morning. The positive global trend lives on as overseas equities show strength through the overnight with European markets up and Asian markets mixed. Oil is slightly higher at $43.83 and rates are unchanged with the 10yr Treasury last quoted at 1.73%. Credit is feels firm with the Invest Grade Index stronger at 83.2/83.7 and cash is slightly higher.
In credit news, expect another heavy day in new issuance. Yesterday’s primary market saw the 2nd highest daily volume ytd totaling $25.6bn priced in IG Credit $1.7bn in HY Credit. Of the new issues, we are active in: ABBV, DUK, DB, WM, and WSTP. This week is anticipated to have $45-50bn priced. Five deals are already set to price today with a possibility of more to come: Citizens Bank, Cheniere Energy, Kraft, DTE Electric, and Regions Financial.
In the news: Allergan, Horizon, Pinnacle and Stifel outperformed Wall Street’s expectations while Wayfair, SolarCity, Hertz and Oasis all underperformed. Allergan is planning to buy back up to $10bn in equity after completing their $40bn sale of its generics business to Teva Pharma.
In economic data, April’s Small Business Optimism Rose to 93.6 and exceeded the estimated 93. The US will be announcing the total job openings by industry (JOLTS Index) and wholesale inventories this morning.
Municipal Bond Market
Munis are unchanged this morning after starting off the week with a firmer tone. We saw the most demand for retail structure paper which is probably a result of money left over from lower than expected allocations on last week’s deals. Attention will be on the primary today as we are being order periods on this week’s $8bln in new issuance. Retail order periods begin today for some the weeks most anticipated deals from the Alameda Tans. Authority and Central TX turnpike authority. 30 day supply is stronger this morning with $14bln on tap over the next 30 days versus $12bln Monday.
We continue to see extremely light trading in non insured PR paper. However, demand for insured paper has picked up over the past week with very HY options out there. AMBAC insured 5’s of 2031 traded @ $101 after trading in mid $90s. Benchmark GOs continue to fade with bonds trading @ $63.25
30 Day visible supply: $14bln