Thursday, August 25, 2016

Corporate Bond Market

US Equity Futures are down to start the day with the DJ Futures -41 and the S&P Futures -5. The global tone is negative with European and Asian equities trading lower through the overnight. Oil is down to $46.45/ barrel and rates are showing strength with the 10yr Treasury up to 1.549%. Credit is wider with the Invest Grade Index showing 71.542/72.186 and cash is also down.

In credit news, Wednesday’s primary market saw $4.8bn in new issuance. We are active in the new Bank of Montreal deal from yesterday. August has priced $118.7bn in Investment Grade and $19.535bn in High Yield credit.

In economic news, there are a handful of announcements scheduled for today in the United States. The change in Initial and Continuing Jobless Claims, Durable Goods Orders, Markit PMI Business Activity, and Kansas City Fed Manf. Activity.

Municipal Bond Market

Munis are stronger this morning after a mixed trading day yesterday.  New issue remains in focus as the majority of deals continue to come over subscribed on the long end.  We should see a shift in demand today with the majority of the week’s new issuance wrapped up and demand shifting into the secondary. In credit news, Chicago Board of Education approved a new debt plan and budget earlier in the week.  The marker responded favorably to the news with longer BOE rallying about 2pts.   
30 day Supply is weaker this morning with $10bln on tap over the next 30 days versus $12bln on Wednesday.

PR trading remains light across most debt sectors as the market waits on more news out of the commonwealth.  We are seeing very little demand for non insured paper at the moment with only a handful of buyers.  One of the few bright spots in the non insured space has been COFINA subs which have picked up a decent retail following over the past few weeks.

30 Day visible supply: 12.3bln