Tuesday, July 12, 2016

Corporate Bond Market

US Equity Futures are up to start the session with the DJ Futures +78 and the S&P Futures +10.25 this morning. The global tone is positive with all overseas markets showing strength through the overnight. Crude is up to $46.02/ barrel and rates are lower with the 10yr Treasury last at 1.476%. Credit is firm with the Invest Grade Index showing 70.30/70.87 and cash is also stronger.

In credit news, this week is expected to be heavy in new issuance with surveys totaling $20bn+ for the week. Yesterday’s primary market saw $3.6bn priced in IG and nothing in HY. Of the new issues, we are active in ANZ, ENLINK, STIFEL, COSAN LUXEMBOURG, and NY LIFE.

In economic data, there are a couple of key announcements scheduled for today. First, the NFIB reported a rise in June’s Small Business Optimism. Later on, the US JOLTS Job Openings will be reported by industry total.

Munis are weaker for the third straight day on extremely light volume.  Market participants will be focused on the primary this week with new issuance offering the only option for supply at the moment. We continue to see an increase in items out for the bid; however, few items end up trading.  New deals will hit about $9bln for the week, highlighted by $1bln from the NY TFA.  Supply is stronger this morning with $14bln on tap over the next 30 days versus $7.8bln last week.

PR trading remains light across most debt sectors with only the most active cusips receiving attention.  At this point, the majority of credits are now trading flat with a few exceptions.   Benchmark PR GOs traded as low as $65.54 flat on Monday after trading in the high 60s with interest just a few weeks ago.

30 Day visible supply: 14bln