Wednesday, September 21, 2016

Corporate Bond Market

US Equity Futures are up to start the day with the DJ Futures +66 and the S&P Futures +7.75. The global tone is mixed with European equities trading higher through the overnight and Asian markets mixed. Oil is up to $44.88/ barrel and rates are also stronger with the 10yr Treasury last at 1.686%. Credit feels firm with the Invest Grade Index showing 75.4/75.6 and cash is also up this morning.

 In credit news, yesterday’s primary market saw a drop off from Monday with $5.5bn priced in Investment Grade new issuance. In the High Yield space, 2 deals worth $950mn were brought forward. We are active in JP Morgan, Northwell Healthcare, and Amtrust Financial from yesterday’s issuance.

In economic data, MBA US Mortgage Applications fell 7.3% last week. Later this afternoon, the FOMC will release the Rate Decision. The market is indicating a steady stance, however the ultimate control is in the hands of the Fed.

Municipal Bond Market               
Munis volume remained extremely light on Tuesday as the market awaits today’s fed announcement.  Throughout the week we have seen very little trading in the secondary with only the most high profile deals of the weak receiving attention.  Smaller deals continue to struggle with lower coupon discount paper feeling the most pressure.  We expect to see trading remain light heading into the fed today. Supply is weaker this morning with $12.3 on tap over the next 30 days versus $13bln on Tuesday.

PR trading continues to slow down with the muni market on hold ahead of the fed.  We have seen below average volume this week across all sectors both insured and non insured.  One of the only active PR bonds right now seems to be insured zeros with a large institutional buyer out there.  PR 8’s were unchanged with bonds trading @ 67F.

30 Day visible supply: 12bln