Wednesday, September 28, 2016

Corporate Bond Market

US Equity Futures are up to start the day with the DJ Futures +13 and the S&P Futures +0.25. The global tone is positive with overseas equities trading up through the overnight. Oil is up to $ 45.34/ barrel and rates are weaker with the 10yr Treasury last at 1.572%. Credit feels firm with the Invest Grade Index showing 70.5/71 and cash is also stronger.

In credit news, yesterday’s primary market saw $3bn priced in Investment Grade Credit; bringing the monthly total to $155.28bn. Tuesday brought $100m in High Yield; bringing September’s tally to $25.42bn.

In economic data, MBA Mortgage Applications dropped 0.7% last week. Also, U.S. Non-Defense Capital Goods Orders Ex-Aircraft for August rose 0.6% and U.S. Durable Goods Orders were unchanged for August; ex-trans. Were down 0.4%.

Municipal Bond Market               
Munis are unchanged this morning after rallying across the curve for the past two days.  We saw strong demand for deals that came on the cheaper side ahead of last week’s FOMC meeting.  Liquidity has improved versus last week with significantly more bidders returning to the market.  New issuance will be strong over the next few days as dealers have been able to lighten up balance sheet with the recent rally.    Supply is stronger this morning with $16.41bln on tap over the next 30 days versus $12.5bln on Tuesday.

PR trading remains light with very little liquidity at the moment.  We are seeing very little demand for non insured paper at the moment with only a handful of buyers.  PR 8’s continue to stabilize in the mid 60s with bonds trading around $66F after trading in the high 60s just last month.

30 Day visible supply: 16.4bln