Monday, September 26, 2016

Corporate Bond Market

US Equity Futures are down to start the week with the DJ Futures -85 and the S&P Futures -9.25. The global tone is negative with overseas equities trading lower through the overnight. Oil is up to $ 44.91/ barrel and rates are also stronger with the 10yr Treasury last at 1.598%. Credit is wide with the Invest Grade Index showing 71.1/71.7 and cash is also weaker.

In credit news, last week’s primary market saw $38.55bn priced in Investment Grade Credit; bringing the monthly total to $147.21bn. September’s High Yield tally has exceeded $25.4bn with four more deals on the calendar for this week.

In economic data, keep a look out for a couple of announcements for today. First, New Home Sales for August will be reported later this morning and September’s Dallas Fed Manufacturing Activity to follow.

Municipal Bond Market               
Munis are firmer this morning after rallying on the longer end of the curve late last week.  We saw demand return to the market for longer dated low coupon paper which had taken the biggest hit over the past two weeks.  New issue will remain in focus this week with a calendar of about $7bln.  This week’s calendar is mostly higher quality general market names which the market seems to be flooded with at the moment.  The secondary should finally receive some attention this week after lagging the primary for most of the past two weeks. Supply is unchanged this morning with $12.5bln on tap over the next 30 days versus $12.5bln 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 $66F after trading in the high 60s a few weeks ago.

30 Day visible supply: 12.5bln