Tuesday, June 7, 2016

Corporate Bond Market

US Equity Futures are up to start the day with the DJ Futures +52 and the S&P Futures +5.50. The global tone is positive as all overseas equities show strength through the overnight. Oil is up to $50.12 and rates are also stronger with the 10yr Treasury last quoted at 1.73%. Credit is firm with the Invest Grade Index showing at 73.5/74.1 and cash is also up this morning.

In credit news, yesterday was a light day in new issuance. The Investment Grade primary market saw just $4.55bln priced and $500mln in the High Yield space. Keep a look out for ANZ and Emera, who may be issuing debt today or tomorrow.

In economic news, the Fed’s Yellen has pretty much taken the possibility of a June rate hike off the table and signified a possibility of a July move. Markets responded positively to this announcement with Stocks and Oil both rallying. There are a couple of key economic reports that are scheduled for today. First, the US IBD/TIPP will be announcing June’s Economic Optimism Index. Following, the Fed will be releasing April’s Change in Consumer Credit.

Municipal Bond Market   

Munis were unchanged to start the week as the market prepares for the largest calendar this year.  We saw customers using Monday as a chance to raise cash to put to work in upcoming deals.  The majority of selling was in one year paper. The largest deal of the week will price today as Georgia prepares to sell $1.3bln in debt. The market will look to this deal to assess the current demand in the market place.  A variety of smaller issuers are set to price deals under $100mln in size as well today. 30 day supply is stronger this morning with $17bln on tap over the next 30 days versus $16bln Monday.
 PR trading remains light as approach July 1st debt payments.  There is very little demand for non insured paper right now, however, we continue to see the market starved for insured paper.  It was one of the few opportunities to pick up yield in this market and seems to be credit of choice for both funds and retail investors right now.  PR benchmark GOs continue to trade in the mid $60s with bonds trading @ $64.50 on Monday.

30 Day visible supply: $17bln