Friday, June 17, 2016

Corporate Bond Market

US Equity Futures are flat to start the day with the DJ Futures +1 and the S&P Futures -1.5. The global tone is positive across the board with all overseas equity markets up through the overnight. Oil is up to $47.25/ barrel and rates are weaker with the 10yr Treasury last quoted at 1.587%. Credit is wider with the Invest Grade Index showing at 82.85/83.5 and cash is stronger.

In credit news, WTD Investment Grade primary market saw $5.725bln priced and $300mln in High Yield; MTD numbers tally $60.13bln in IG and $19.925bln in HY.

In economic news, housing starts outperformed expectations and Building permits underperformed estimates for May.

Municipal Bond Market   

Munis are unchanged this morning after rallying for the 10th straight day.  The market continues to show strong demand for any name with a little bit of yield.  IL ST GOs came to market yesterday with $500mln in new debt and were met with extremely strong demand across the curve.  The majority of the deal went away to customers leaving very little for street to absorb.  New issuance is expected to hit $8bln next week and we should see deals price on the aggressive side.  The muni yield curve has seen a 24bp rally on the 10yr and 32bp rally on the 30yr since the start of June.  Funds continue to face inflows of new cash which will be difficult to put to work given current market conditions. 30 day supply is stronger this morning with $11bln on tap over the next 30 days versus $8bln yesterday.
PR trading was light on Thursday after two very active days earlier in the week.  PREPA bonds continued to trade in the low $60s after the Supreme Court’s ruling earlier in the week.  Benchmark GOs continue to see very little price movement here as bonds continue to trade around $66 on Wednesday.

30 Day visible supply: $11bln