Abdullah Karatash

Stocks closed in negative territory with the market somewhat jittery after another earthquake struck off the coast of Japan.

The credit markets rallied on, however, with cash bonds leading the way tighter.

CDS (credit default swap) spreads under-performed relative to cash bonds but that has been an ongoing trend.

It's a relatively quiet calendar until next week; in the absence of any crazy headlines, credit spreads should continue to grind in.

In corporate bond new issues, foreign issuers were much more active with many U.S. issuers quiet ahead of earnings.

Retailer the Gap drew a lot of investor interest with its $1.25 billion 10 year debt issue at +245, the company's first debt issue.

Interestingly, CDS spreads for Gap closed tighter on the day after initially widening on the debt issue.

We saw this before in the agency markets where new issues force the market to reconsider spread levels for existing comparables or CDS and in a market like this, new issues actually have the potential to pull the entire complex tighter.

Insurer MassMutual sold $250 million of 3 year FRNs (floating rate notes) and $400 million of 5 year debt.

Internationally, South Korean steelmaker Posco hit the markets with a $700 million 10 year bond issue at +175.

Australian telecom sold $1 billion of 10 year debt at +133.

Danish bank Danske Bank sold $1.25 billion of 5 year debt at +160 and $500 million of 3 year FRNs.