Monday, September 6, 2016

Corporate Bond Market

US Equity Futures are up to start the week with the DJ Futures +16 and the S&P Futures +2. Overseas equities are mixed through the overnight. Oil is up to $44.94/ barrel and rates are stronger with the 10yr Treasury last at to 1.594%. Credit feels firm with the Invest Grade Index showing 71.679/71.974 and cash is also up.

In credit news, after a quiet couple of weeks in new issuance, today is set to bring a plethora of new deals to market. September is expected to see $125bn+ in Investment Grade Credit.

In economic data, there are a couple of key announcements scheduled for this morning. First, the Labor Market Conditions Index Change will be announced at 10AM. Following, the ISM Non- Manufacturing Composite and IBD/TIPP Economic Optimism will be reported shortly after.

Municipal Bond Market

Munis are unchanged this morning after trading weaker for most of last week.  Volume was light with most trading desks understaffed heading into the last week of the summer.  We expect to see strong demand for this week’s light calendar with only $5bln scheduled vs. about $7.5bln average this year.  The most notable deals of the week will come from the Texas Transportation Authority and St Joseph Health system which should be extremely well received.  Supply is stronger this morning with $13.7bln on tap over the next 30 days versus $12bln on Friday. 

PR trading picked up last week after the White House announced the members of the control board.  We saw the largest demand for COFINA Subordinated debt and GOs.   The selected members were viewed as credit positive for PR debt holders.   PR 8’s traded higher with the rest of GO debt with bonds trading @ $66 after sitting in the low $60s for much of August.

30 Day visible supply: 13.7bln