Market Post: Munis Quiet as Summer Doldrums Set In

The tax-exempt market was feeling the effects of a quiet summer August day as traders said the market was very slow.

Most of the week’s primary issuance is expected to price later in the week, although a retail order pricing of the week’s largest deal was expected to hit the market later Monday – which could provide some direction for munis.

But until the majority of the new issues hit, traders said the market will remain slow. “Munis are dead,” a New York trader said. “It’s August.”

The Municipal Market Data scale was not updated by press time. On Friday,  the 10-year tax-exempt yield finished at 1.71%, 11 basis points above its record low of 1.60% set July 26. The 30-year yield closed at 2.87%, eight basis points off its record low yield of 2.79% set July 25. The two-year was steady at 0.29% for the seventh consecutive session.

Treasuries were stronger Monday morning. The benchmark 10-year yield and the 30-year yield each fell two basis points to 1.55% and 2.63%, respectively. The two-year yield dropped one basis point to 0.24%.

In the primary market this week, the market can expect $6.35 billion, up from last week's revised $5.93 billion. On the negotiated calendar, $4.07 billion is expected to be priced, down slightly from last week's revised $4.16 billion. In the competitive market, $2.28 billion is expected to be auctioned, up from last week's revised $1.77 billion.

Later Monday, Bank of America Merrill Lynch is expected to price its first of a two-day retail order period of $850 million of New York City Transitional Finance Authority future tax-secured bonds and subordinate bonds, rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's and Fitch Ratings.