Friday, August 25, 2017

Good morning—Global equities are mostly higher to start the session as fears of North Korea have somewhat abated. European stocks are all in the green after getting crushed yesterday. The Euro Stoxx is up 17 points, DAX up 64 points, and the FTSE up 29 points. Asian markets are mixed with the Nikkei down 10 points and the Hang Seng up 297 points. US stocks are all positive to start this morning with the DOW up 24 points, S&P up 0.75 points, and the NASDAQ up 9.25 points. After breaking below 2.1% yesterday, the yield on the US 10yr is back up to 2.145% and credit ended the day weaker. It’s worth noting that gasoline futures rose to a 2-year high as Tropical Storm Harvey continues to wreak havoc. Today’s economic data includes ADP employment change and GDP.


Munis finished stronger yesterday as traders saw Goldman price California’s $2.5 billion GO bonds for institutions. The deal, which was rated Aa3 by Moody’s and AA-minus by S&P and Fitch, came to market in two parts. The $788.82 million of various purpose GO’s were priced as 3’s and 5’s to yield from 0.77% in a split 2018 maturity to 2.26% with a 5% coupon in 2028 and 2.50% with a 5% coupon in 2031, 2.86% with a 4% coupon and 2.56% with a 5% coupon in a split 2032 maturity, 2.73% with a 5% coupon in 2035 and 3.30% with a 4% coupon, and 2.95% with a 5% coupon in a split 2047 maturity. In other news, we saw Chicago Board of Education bonds continue to rally as Illinois is set to end their funding crisis. The Chicago Board of Education’s taxable bonds due in 2039 rallied more to 93.5 cents on the dollar which is 3 points above last week’s close. Yesterday in Puerto Rico, we saw the federally-appointed oversight board sue Governor Rossello for rejecting furloughs.