Market Post: Dealers Look to Sell, Lighten Inventory in Weaker Market

Activity in the tax-exempt market slowed Wednesday afternoon as traders looked to sell while holding off on buying ahead of the impending Federal Open Market Committee meeting announcement.

"We have some stuff that we are looking to sell but I don't think there is anything big until after the Fed announcement," a San Francisco trader said. "It's been so weak over the last few days that dealers are trying to get light on inventory and are not buying."

This trader said the market has stabilized but there is not much of a bid side. The bid-ask spread is wide.

"From the buying front, we are looking at the secondary and picking spots but we haven't had a ton of success. We hope it's weaker after the Fed."

In the primary market, RBC Capital Markets priced for retail $332.7 million of New York's Metropolitan Transportation Authority revenue bonds, rated A2 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings. Institutional pricing is expected Thursday.

Yields ranged from 0.39% with a 4% coupon in 2014 to 4.41% with a 5.25% coupon in 2043. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2023 except those maturing in 2027 and 2033 which are callable at par in 2018.

Tuesday, yields on the Municipal Market Data scale ended as much as four basis points higher. The 10-year yield increased one basis point to 2.24% and the 30-year yield rose three basis points to 3.53%. The two-year was steady at 0.31% for the fifth session.

Muni yields on the Municipal Market Advisors 5% scale closed as much as three basis points higher. The two-year and 10-year yields increased one basis point each to 0.39% and 2.34%, respectively. The 30-year yield rose two basis points to 3.64%.

Treasuries pared morning gains and traded weaker Wednesday afternoon. The benchmark 10-year yield rose four basis points to 2.23% and the 30-year yield increased one basis point to 3.36%. The two-year was steady at 0.27%.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER