Wednesday, August 3, 2016

Corporate Bond Market

US Equity Futures are down to start the day with the DJ Futures -32 and the S&P Futures -3.25. With the exception of Amsterdam and China, the global tone is negative as European and Asian equities trade lower through the overnight. Oil is up to $39.78/ barrel and rates are also stronger with the 10yr Treasury last quoted at 1.547%. Credit is firm with the Invest Grade Index showing 76.24/76.69 and cash is also up.

In credit news, there are a few deals on the calendar for today. UBS, World Bank, and SPX Flow are all bringing bonds to market today.  We are active in Microsoft, Rabobank, and MGIC from yesterday’s new issue. Yesterday’s primary market saw $9.25bn priced in IG Credit and $1.5bn in the HY space.

In the news, Dominion, Genworth, Molson and RRD reported Q2 earnings that outperformed Wall St’s estimates while Nabors and Stone Energy missed. Keep a look out for CenturyLink, CF, Lincoln and Marathon reporting today.

In economic data, the ADP Employment Change beat estimates by 9k jobs showing an increase in strength in the US Economy.

Municipal Bond Market

Munis are stronger this morning after trading weaker for the second straight day.  We continue to see sloppy trading in the secondary and very little demand.  New issuance from the past few weeks has really struggled in secondary trading with certain deals trading about 10bp cheaper than where they came originally.    That being said, the market continues to focus heavily on the primary with high profile deals receiving strong demand.  Today will be the most active day in the primary this week with the pricing of a variety of deals including Miami Dade Airport Authority and Oklahoma Muni Power.   30 day Supply is stronger this morning with $13bln on tap over the next 30 days versus $11bln on Monday.

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 have stabilized @ 65.50F with very few trades.

30 Day visible supply: 13bln