Corporate Bond Market
US Equity Futures are weak to start the week with the DJ Futures -60 and the S&P Futures -6. The global tone is negative with European equities down and Asian markets mixed through the overnight. Oil is down to $48.52/ barrel and rates are stronger with the 10yr Treasury last quoted at 1.635%. Credit is wider with the Invest Grade Index showing at 79.9/80.4 and cash is also weaker.
In credit news, dealers are expecting a fairly light week in new issuance this week. Last week, the Investment Grade primary market saw $33.625bln priced and $12bln in High Yield; MTD numbers tally $53.875 bln in IG and $15.1bln in HY making it the busiest week in the cash market since the first week of November.
In economic news, there are no major announcements scheduled for today aside from some possible commentary on the latest Brexit Polls taken over the weekend. Based on the recent polls alone, it is becoming more likely that Britain may sway toward leaving the European Union though experts claim that the vote is still too close to call.
Municipal Bond Market
Munis are stronger again this morning after rallying all of last week. We saw aggressive buying throughout the curve with the 10 year muni curve tightening 10bps and the 30yr tightening 18bps. The market easily absorbed last week’s $15bln new issue calendar which should set the tone for the week ahead. The market is setup to continue to rally here as funds continue to receive new cash and supply drops to about $5bln this week. The highlight of this week’s calendar will be $450mln IL State GOs. 30 day supply is unchanged this morning with $10.0bln on tap over the next 30 days.
PR trading remains light; however, we are starting to see stronger demand compared to the past few weeks. The market has certainly firmed up across all sectors of the PR market; we have seen the most significant move in Commonwealth GTD debt and PRASA. Benchmark GOs continue to sit in the mid $60s with bonds trading around $65 for most of last week.
30 Day visible supply: $10bln