Thursday, September 28, 2017

Good morning- Global equities are mixed to start this morning’s session. In Europe, the Euro Stoxx 50 is up 3 points, FTSE down 12 points, and DAX up 36.5 points. Asian stocks are mostly negative with the Nikkei down 60 points and the Hang Seng down 97 points. US equities are all lower after touching an all-time high yesterday. The DOW is down 30 points, S&P down 3.25 points, and the NASDAQ down 14.75 points. The yield on the US 10 yr is up to 2.334% as market participants assess President Trump’s tax plan. The Bloomberg Barclays IG and HY indices closed tighter on Wednesday as the curve continue to steepen. Moreover, oil is on its way to $53/bbl after a surprising drop in crude inventories. In economic news, we will hear from several Fed speakers and see the numbers on weekly jobless claims.

Things are starting to get interesting in the muni market. Fortunately, the tax-exempt status of muni bonds is not in jeopardy under Republican’s plan for tax reform, however, the federal deduction for state and local taxes would be repealed. The plan would also eliminate the alternative minimum tax (AMT) which the majority of private-activity bonds are subject to. With respect to Puerto Rico, Trump waived the Jones Act in order to facilitate relief efforts on the island. The Jones Act requires shipments of goods between two U.S. ports to be made with American-flagged vessels which limits the amount of shipping and makes imports significantly more expensive for the island.