Monday, April 17, 2017

Corporate Bond Market

US Equity Futures are all slightly lower to start the session with the S&P Futures -2 and the DJ Futures -14. Global  equities are also trading lower with the exception of Europe who is closed for a holiday. Yields on the 10 yr are at 2.220 and oil is down almost 50 cents. WTI Crude is quoted $52.72/ barrel this morning. Credit is again wider this morning with the Investment Grade Index showing 50.498/51.884 and cash is also slightly wider.

There were no investment grade issuances on Thursday. As a result, April’s volume remains at $50.85bn and YTD volume is $561.225bn. There is also no investment grade new issue supply expected today, but issuance should pick up this week.

No economic data has been reported yet, but we will see Empire Manufacturing numbers as well as Netflix earnings.

Municipal Bond Market

The muni market will see nearly $7 bn of new issuance this week after a strong finish to last week. Last week we saw New York City TFA’s issued at a 3.46 and trade as high as 3.36 before settling down around 3.44%. With a plethora of low-yielding paper out there, we can expect people to continue chasing yield. On Wednesday the PA hospital, Geisinger Authority, Montour Co, will issue $345.25 million in revenue bonds and California will price $1.25 bn of taxable GO high speed passenger train bonds on Thursday. In Puerto Rico we saw more litigation than anything else. A group of COFINA bondholders announced that they are suing BNY Mellon and a Puerto Rican Union filed a lawsuit against Governor Rossello and the Board over pension cuts.  

2018: unchanged

2019: 1bp bump

2020-2023: 2bp bump

2024-2038: 4bp bump

2039-2047: 3bp bump

         tsy 10yr 2.220%