Tuesday, June 21, 2016

Corporate Bond Market

US Equity Futures are up to start the session with the DJ Futures +32 and the S&P Futures +5.25. The global tone is mixed with European and Asian markets both mixed through the overnight. Oil is a bit weaker at $48.41/ barrel and rates are stronger with the 10yr Treasury last quoted at 1.675%. Credit is wider with the Invest Grade Index showing 80/80.6 and cash is also weaker.

In credit news, yesterday was a light day in new issuance. The Investment Grade primary market saw $2.25bln priced and $1.35bln in High Yield.

In economic news, the MBA will be releasing the weekly tally of Mortgage Application change. Following, the FHFA will be announcing the monthly change in the Housing Price Index and existing home sales.

Municipal Bond Market   

Munis are unchanged this morning after trading weaker across the curve to start the week.  There was very little liquidity Monday as market participants remain hesitant to put on risk ahead of Thursdays vote in the UK.  We saw a significant amount of items out for the bid and in some cases zero bidders.  New issue should feel some pressure this week as well with market participants hesitant to put in for deals after an almost two week rally. 30 day supply is unchanged this morning with $13bln on tap over the next 30 days.
We continue to see steady buying of select insured and non insured PR credits.  Demand has been strong across most insured debt since it is one of the few sources of yield in this market.   PREPA bonds continued to trade in the low $60s after the Supreme Court’s ruling earlier in the week and we expect them to move higher from here. 

30 Day visible supply: $13bln