Tuesday, August 29, 2017

Good morning—Global equities are lower start the session after North Korea fired an unidentified ballistic missile over Japan on Tuesday. The Euro Stoxx is down 46 points, DAX down 223 points, and the FTSE is down 87 points. Asian markets are mixed with the Nikkei down 80 points and the Hang Seng up 39 points. US stocks are all in the red to start this morning with the DOW down 92 points, S&P down 12 points, and the NASDAQ down 43 points. With investors flocking to safe havens like gold, the yield on the US 10yr fell all the way to 2.12%. Furthermore, IG credit was mostly flat for the third straight session and HY was slightly tighter. Consumer confidence will be the focus of today’s economic data.

 

Munis finished flat yesterday as retail investors saw California’s $2.5 billion GO bond deal come to market. Goldman priced the deal which was rated Aa3 by Moody’s and AA-minus by S&P and Fitch. The $788.82 million of various purpose GO’s were priced for retail as 4’s to yield from 1.09% in 2021 to 2.23% with a 5% coupon in 2028 and as 5’s to yield 2.50% in 2031. A split half of a 2032 maturity was priced as 4’s to yield 2.86% and the split half of a 2047 maturity was priced as 4’s to yield 3.31%. The other $1.72 billion of various purpose refunding GO’s were priced as 4’s to yield from 0.77% in 2018 to 2.75% in the split half of a 2031 maturity. Lastly, a split half of a 2036 maturity was priced as 4’s to yield 3.09% and the split half of a 2037 maturity was priced as 4s to yield 3.12%. The new issue calendar for the weeks shows $5.77 billion of negotiated deals and $1.10 billion of competitive sales.