Thursday, September 22, 2016

Corporate Bond Market

US Equity Futures are strong to start the day with the DJ Futures +64 and the S&P Futures +7.5. The global tone is positivethis morning with overseas equities trading higher with the exception of Japan. Oil is up to $45.95/ barrel and rates are also stronger with the 10yr Treasury last at 1.648%. Credit is firm with the Invest Grade Index showing 70.6/71.2 and cash is also up this morning.

 In credit news, there was no Investment Grade issuance as the market awaited the Fed’s rate decision. We are expecting deals from Goldman Sachs, Mexico City, and Hyundai to price today with more on the way.

In economic data, the Fed has left rates unchanged, hawkish on a December rate hike. The market has responded positively.

Municipal Bond Market               
Munis were unchanged throughout the curve on Thursday after the fed decided to leave rates unchanged.  Morning trading was extremely light, however, we did see a pickup in trading post fed.  The biggest mover was longer lower coupon paper which has seen a significant sell off over the past two weeks.  Lower coupons from all issuers firmed up after the fed with bonds up about 1-2pts.    We expect to see follow through today in higher quality names. Supply is stronger this morning with $12.7 on tap over the next 30 days versus $12bln on Wednesday.

PR trading was extremely light as the market focused on the fed.  We have seen below average volume this week across all sectors both insured and non insured.  PR zeros seem to be the only active credit at the moment with large institutional buyers out there.  PR 8’s were unchanged with bonds trading @ 67F.

30 Day visible supply: 12.7bln