Tuesday, July 19, 2016

Corporate Bond Market

US Equity Futures are mixed with the DJ Futures +5 and the S&P Futures -4 to start the session. The global tone is negative with both European and Asian markets down through the overnight. Oil is stronger last at $45.66/ barrel and rates are also up with the 10yr Treasury last quoted at 1.55%. Credit is wider with the Invest Grade Index showing 71.6/72.07 and cash is also weaker.

In credit news, today is expected to be a bit lighter in new issuance following yesterday’s monster day. Monday’s primary market saw $20.1bn priced in IG Credit and $250mn in the HY space. Teva led the way by issuing a 6 part, $15bn deal that we are active in. We are also trading new CITI, and Wells Fargo bonds that came to market yesterday.

In the news, Netflix announced Q2 earnings that missed analysts’ estimates sending their stock price down significantly.

In economic data, housing starts and building permits outperformed expectations for June.

Municipal Bond Market   

Munis are stronger this morning after trading weaker in the past four trading sessions.  Demand was extremely light to start the week with one of the lightest trading days of the summer.  Market participants seem more and more hesitant to put money to work as cash builds on the sidelines.  The primary has been the main supply for bonds and we expect that to continue this week with a large Michigan Builders and NY TFA deal.  Supply is stronger this morning with $13.5bln on tap over the next 30 days versus $12bln on Monday.

PR trading has been light in most sectors over the past week.  We are seeing demand for larger more actively trade cusips, however, smaller issue sizes are receiving very little demand.  PR 8’s continue to trade in the mid $60s. 

30 Day visible supply: 13.5bln