Tuesday, August 16, 2016

Corporate Bond Market

US Equity Futures are down to start the day with the DJ Futures -30 and the S&P Futures -3.25. With the exception of China, the global tone is negative as European and Asian equities trade lower through the overnight. Oil is stronger at $46.04/ barrel and rates are also up with the 10yr Treasury last quoted at 1.529%. Credit is wider with the Invest Grade Index showing 70.889/71.119 and cash is also down.

In credit news, spreads tightened yesterday to hit a new low for 2016 US IG Bond Indexes. Investment grade new issuance is up to $98.29b for August and $15.815b MTD priced in high yield credit.

Municipal Bond Market

Munis are stronger this morning after trading weaker across the curve on Monday.  We saw extremely weak demand on light volume to start the week as the majority of market participants await the $5.6bln in new deals.  This weeks calendar is smaller than what we have seen over the past few weeks, however, about 25% of new deals will be yieldier names which should be met with strong demand.  Today will be the highlight of the week’s new issuance with the pricing of both the St. Josephs Health System and Barclays Center deals.  Supply is weaker this morning with $11.3bln on tap over the next 30 days versus $12bln on Monday.

PR trading remains light across most debt sectors with very little price movement over the past month.  PR 8’s have stabilized around $65F on light volume.  The only real demand for PR paper right now is in the insured space as bonds continue to trade higher than ever.

30 Day visible supply: 11.3bln