Wednesday, May 4, 2016

Corporate Bond Market

US Equity Futures are weak to start the day with the DJ Futures -92 and the S&P Futures -12.75 in early trading. The negative global trend continues with all overseas equities markets showing down this morning. Oil is up to $44.39 and rates are up with the 10yr Treasury last at 1.79%. Credit is wider with the Invest Grade Index at 81.9/82,5 this morning while cash is also weaker.

In credit news, $4.35bn IG and $3.015bn HY Credit priced yesterday. Yesterday has some considerable new issues despite the general volatility and falling oil prices. Of those issued, we are active in Arizona Public Service, AT&T, Hanes, and US Steel.

In the news, Australia’s government announced news to cut interest rates to a record low 1.75%. This is an expansionary budget plan to cut company taxes, lift infrastructure spending and aid in income-tax relief. The markets reacted negatively to this news yesterday sending stocks down and the USD up. CBS, Live Nation, Time Warner, and Priceline outperformed analysts’ estimates for Q1. Dominion, Duke Energy, Western Union, and Zillow are among those that missed projections. Keep a look out for: Allstate, CenturyLink, Marathon Oil, MetLife, Sunoco, and Tesla set to release today.

In economic data, the MBA announced that the US Mortgage Applications have decreased 3.4% over the past week. Some key figures that will be announced this morning are the: US Trade Balance of Goods and Services, US Durable Goods New Orders Industries, US Manufacturers New Order Totals, and the ADP National Employment Report.

Municipal Bond Market 

Munis are stronger again this morning after rallying across the curve on Tuesday.  The market continues to look to treasuries for direction, which lead to a majority of accounts trying to put some money to work before dealers could raise their offerings.  The focus remains on new issuance for the main supply of bonds.  We are seeing huge demand for new deals with longer maturities coming in at 4x-7x oversubscribed. 30 day supply is stronger this morning with $13.29bn on tap over the next 30 days versus $13bn Tuesday.

PR trading remains extremely light after the commonwealth missed payment on principle of GDB debt.  Benchmark GOs continue to trade @ $65 after the missed payment, however, demand has been light across other debt sectors.

30 Day visible supply: $13.29bn