Tuesday, September 7, 2016

Corporate Bond Market

US Equity Futures are down to start the session with the DJ Futures -12 and the S&P Futures -2.25. Overseas equities are mixed through the overnight. Oil is down to $44.77/ barrel and rates are stronger with the 10yr Treasury last at to 1.525%. Credit is wider with the Invest Grade Index showing 71.399/71.844 and cash is also weaker.

In credit news, yesterday’s primary market saw $22.575bn priced in Investment Grade Credit and nothing in HY Credit. We are active in Honda, KeyCorp and Mitsubishi. Today will be another heavy day in new issuance with deals from PSEG, Nissan, Valero, and many more.

In economic data, there are a couple of key messages scheduled for today. First, MBA Mortgage Applications increased 0.9% last week. Following, at 10:00AM, the tally of US Job Openings by Industry Total will be announced. Later this afternoon, the US Federal Reserve’s Beige Book will be released.

Municipal Bond Market

Munis were weaker to start the shortened week as the market remains hesitant to put cash to work here.  We continue to see large amounts of cash sitting on the sidelines as buyers put money to work selectively in the primary.  This week’s calendar will be jammed into just two days (Wednesday and Thursday) with the largest deal of $615mln from the Texas transportation authority pricing Thursday.  New issuance today is mostly comprised of smaller deals less than $200mln.  Supply is stronger this morning with $15bln on tap over the next 30 days versus $13.7bln on Monday.

PR paper continued to rally Monday after the White House announced the members of the control board last week.  PR GOs in 2037 traded @ 62 after trading in the high 50s for most of August.   Insured paper has seen the greatest demand with aggressive buying across the curve from both dealers and customers. 

30 Day visible supply: 15bln