Monday, June 20, 2016

Corporate Bond Market

US Equity Futures are up to start the week with the DJ Futures +220 and the S&P Futures +28. The global tone is strong across the board with all overseas equity markets up through the overnight. Oil is up to $48.82/ barrel and rates are weaker with the 10yr Treasury last quoted at 1.666%. Credit is firm with the Invest Grade Index showing 78.2/78.875 and cash is also stronger.

In credit news, $190mln in HY credit was brought to market on Friday and nothing in IG. WTD Investment Grade primary market saw $5.725bln priced and $490mln in High Yield; MTD numbers tally $60.13bln in IG and $19.944bln in HY.

In economic news, there are no major releases scheduled for the day. Recent polls showing a decrease in Brexit probability as the world stands by heavily anticipating Thursday’s vote.

Municipal Bond Market   

Munis are weaker this morning as the market continues to look to tsys for direction.  It was a quiet close to the week on light volume after rallying about 10bps on the week.  Attention will shift to the primary this week with $8.2bln in new issuance vs. $5bln last week.  Highlights of the calendar include $400mln from Yale University, $302mln from NY Housing Authority, and $200mln from Adventist Health System.  We should see a ton of demand for yield plays in the secondary with almost no supply on this week’s calendar.  Some of the typical yield plays from the past few months should see the greatest benefit.  Funds continue to face inflows with $904mln in new cash after inflows of $825mln during the previous week.   30 day supply is stronger this morning with $13bln on tap over the next 30 days versus $11bln Friday.
PR trading was light on Friday after a flurry of trading 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 continued to trade around $66 on Friday.

30 Day visible supply: $13bln