Corporate Bond Market
US Equity Futures are down for the third straight day with the DJ Futures -120 and the S&P Futures -14. The global trend is negative for the most part with European markets down and Asian markets mixed. Oil is down to $46.89 per barrel and rates are stronger with the 10yr Treasury last at 1.837%. Credit is wider with the Invest Grade Index at 83.8/84.4 and cash is also a bit weaker.
In credit news, today will be a bit lighter in new issuance. There are deals from Southern Co, Kallpa Generación, and Export Development Canada already set to price with the possibility of more to come. Yesterday’s primary market saw $19.875b priced in IG Credit bring the monthly total to $140b. In the HY space, $3.75b came to market yesterday bringing May’s total to $15.39b. Of the new issues, we are active in HSBC, SIR, and WRB.
In the news, the Fed has made it clear that it wants to raise interest rates in June pending the performance of the economy until then. Following the release of the meeting minutes: stocks, commodities, and bonds fell in anticipation of a rate hike coming in the near future. Cisco, Salesforce, and Wal-Mart reported Q1 profits that outperformed analysts’ estimates. The positive performance of Wal-Mart and Dick’s is great news for Retail as the rest of the sector has been in recent turmoil given pressure from Amazon.
In economic data, the Chicago Fed has reports that April’s National Activity Index has beat estimates. The Philadelphia Fed has announced that May’s Business Outlook Index has fallen to -1.8% (previously -1.6%). Lastly, the Department of Labor reported that the US Initial and Continuing Jobless Claims has dropped to from last week’s 1yr high.
Municipal Bond Market
Munis were unchanged this morning after selling off across the curve in Wednesdays trading. Liquidity was scarce in the secondary as we saw an increase in dealer BWs as the majority of market participants looked to price their inventory. The only real demand was for the LaGuardia Terminal B deal. Bonds broke up 10bps right away and continued to rally this morning trading up another 5bps. 30 day supply is weaker this morning with $11bln on tap over the next 30 days versus $13bln Tuesday.
In credit news, the house finally released the highly anticipated bill on PR. The bill reads extremely positively for GOs and we should see some price support over the next few days. Benchmark 8s continue to trade in the mid $60s after trading around $63.50 last week.
30 Day visible supply: $13.5bln