Friday, May 20, 2016

Corporate Bond Market

US Equity Futures are strong to start the session with the DJ Futures +40 and the S&P Futures +4 to end the week. Overseas equities are mixed with European Equities up and Asian Markets mixed. Oil is down this morning to $47.95 per barrel and rater are also weaker with the 10yr last at 1.86%. Credit feels firm with the Investment Grade Index at 84.35/84.77 and cash is also stronger.

In credit news, today will light in new issuance as we conclude the week. Yesterday’s primary market saw $10.15b priced in IG Credit, bringing this week’s total to $65.5b and the monthly total to $150.3b. In HY, $1.9b priced yesterday bringing the weekly total to $6.65b and $17.29b MTD. Of the new issues, we are active in Southern Co.

In economic data, April’s tally of existing home sales will be reported later this morning.

Municipal Bond Market   

Munis are weaker again this morning as the market continues to face pressure across the curve. The sudden move in the muni curve caught the majority of the market off sides and has pretty much frozen secondary trading over the past two days. We continue to see an uptick in BWs with very items actually trading as dealers attempt to price their inventory in the current state of the market.  Demand for new issuance is starting to show signs of weakness as well with smaller deals sitting with balances for the first time in weeks.  On the flip side, muni funds continue to face inflows with $1.2bln in new cash. 30 day supply is stronger this morning with $13.00bln on tap over the next 30 days versus $11bln Wednesday.

In credit news, the house finally released the highly anticipated bill on PR.   The bill read extremely positive for GOs and PREPA which lead to an increased demand in trading.   PREPA paper traded in the high $50s after trading the mid $50s over the past few weeks.  Benchmark GOs also saw a lift with bonds trading @ $66 after trading around $63 last week.

30 Day visible supply: $13.5bln