Tuesday, June 14, 2016

Corporate Bond Market

US Equity Futures are weak to start the session with the DJ Futures -34 and the S&P Futures -5.25. The global tone is negative with all overseas equities down and Asian markets mixed through the overnight. Oil is down to $48.29/ barrel and rates are stronger with the 10yr Treasury last quoted at 1.587%. Credit is wider with the Invest Grade Index showing at 83.2/83.9 and cash is also weaker.

In credit news, today should see a bit more activity in new issuance compared to yesterday. Monday’s Investment Grade primary market saw $1.505bln priced and $4.525bln in High Yield; MTD numbers tally $55.38bln in IG and $19.625bln in HY. June is expected to yield $106bln IG credit and $30bln HY priced in new issue.

In economic news, there are a few key announcements scheduled for today in the United States. The change in Import Price Index, Retail Sales, and Business Inventories will all be reported this morning.

Municipal Bond Market

Munis are stronger again this morning after an extremely quiet trading session yesterday.  We saw extremely light demand as market participants remain hesitant to put money to work at these levels.  Supply is scarce in the market right now with a light new issue calendar and aggressive offerings in the secondary.  We should see a focus on BWs over the next week as customers try to put money to work away from the primary. 30 day supply is unchanged this morning with $10.0bln on tap over the next 30 days.
 In credit news, the Supreme Court rejected the commonwealths attempt to let its public utilities restructure their debt.    The market reacted positively to the news with PREPA paper rallying the most.  PREPA bonds traded this morning @ 61.25 after trading in the high 50s over the past two weeks.  Benchmark GOs continue to sit in the mid $60s with bonds trading around $66 Monday.

30 Day visible supply: $10bln