Thursday, September 15, 2016

Corporate Bond Market

US Equity Futures are up to start the day with the DJ Futures +62 and the S&P Futures +7.5. The global tone is mixed with overseas equities trading mixed through the overnight. Oil is up to $43.88/ barrel and rates are also stronger with the 10yr Treasury last at 1.686%. Credit feels firm with the Invest Grade Index showing 75.78/76.28 and cash is also stronger this morning.

In credit news, yesterday’s primary market saw $8.1bn priced in Investment Grade Credit and $2.25bn priced in HY Credit. Today is expected to be a little lighter in new issuance. African Development Bank is on the calendar to bring a $1bn 3yr deal today.

In economic data, there are a handful of key announcements scheduled for today. First, the Current Account Balance will be reported. Followed up by: Initial Jobless Claims, Philly Fed Business Outlook, Empire Manufacturing, Industrial Production, and Business Inventories.

Municipal Bond Market        

 Munis were mostly unchanged across the curve in an extremely light trading session.  The primary received a mixed reception with big name deals performing well and smaller deals sitting with balances for the most part. The biggest loser in this sell off has been deals that came to market within the past month.  Dealers and customers seem to be stacked against each other with very little liquidity as money is put to work in newer deals.  In credit news, the Chicago city council approved a 29% increase in water sewer rates to help close their pension shortfall.  The news was viewed extremely positively by the market with Chicago paper up about 5bps.  Supply is weaker this morning with $12.2blnbln on tap over the next 30 days versus $15bln on Wednesday.

 PR trading continues to lighten up this week with very few bidders.  We continue to see a significant amount of items out for the bid, however, very few items trading.  There are still select buyers of non insured paper, however, the market has certainly cooled off compared to what we saw last week.   PR 8’s continue to drift higher with bonds trading around $67.5F after trading in the high 60s a few weeks ago.

30 Day visible supply: 12.2bln