Monday, August 1, 2016

Corporate Bond Market

US Equity Futures are up to start the week with the DJ Futures +18 and the S&P Futures +1.5. With the exception of Germany, he global tone is negative as European and Asian markets trade lower through the overnight. Oil continues to drop as crude hits $40.91/ barrel and rates are also weaker with the 10yr Treasury last quoted at 1.85%. Credit is wider with the Invest Grade Index showing 72.267/72.790 and cash is also weaker.

In credit news, today is expected to see a few deals in new issuance to start the month. Microsoft is on the calendar to issue a 7-part deal and Santander will be bringing a 5yr issue. July’s primary market saw $125.335bn priced in IG Credit and $14.945bn in the HY space.

In the news, Diamond Offshore reported Q2 earnings that outperformed Wall St’s estimates while AMC Entertainment missed. Keep a look out for Frontier, Williams Partners, and Alere reporting aftermarket today.

In economic data, Markit will be reporting July’s US Manufacturing PMI est. 52.9 (prior 52.9).

Municipal Bond Market

Munis are weaker this morning after a mixed performance last week.  Munis will be dominated by the primary with about $12bln in new issuance.  This is the largest calendar since June 6th and we should some front end selling as accounts raise cash to put to work in new deals.  The most notable names of the week will be $1.1bln from New York City, $788mln from Minnesota, and $742mln from Miami Dade County.  Supply is weaker this morning with $11.8bln on tap over the next 30 days versus $12.3bln on Friday.

PR trading remains light across most debt sectors with only the most active cusips receiving attention.  We are seeing very little demand for non-insured paper at the moment with only a handful of buyers.  PR 8’s continue to drift lower with bonds trading around $65.50F after trading in the high 60s prior to July coupon payments.

30 Day visible supply: 11.8bln