A burst of activity in the secondary market has pushed intermediate and long-term tax-exempt yields lower as the day's session crosses into the afternoon.
Muni yields have been moving in sympathy with Treasuries, as well as
"It's giving the market a little better tone," he said. "There's a lot of activity, in general. The market is up another two-to-three points today, depending on the issuer and maturity. I'm not sure what kinds of bonds are going away to permanent investors, but traders are buying bonds."
The meager supply isn't expected to last. Potential muni volume for next week should total $8.25 billion, up from sales of $4.39 billion this week, according to Ipreo, The Bond Buyer and Thomson Reuters numbers.
Digging deeper, the market expects $5.67 billion of negotiated sales next week, versus a revised $3.77 billion sold this week. In addition, $2.59 billion of bonds are scheduled for competitive sale next week, compared with $620.0 million this week.
In the short term, investors anticipate a significant increase in volume. The Bond Buyer's most recent 30-day visible supply showed $12.4 billion looming.
In the negotiated market Friday, Wells Fargo Securities priced $162.7 million of Stratford, Conn., taxable general obligation bonds. They were rated A1 by Moody's Investors Service and AA by Standard & Poor's.
The credits arrived structured as serials, maturing from 2014 with a spread to Treasuries of 120 basis points to 2025 with a spread to Treasuries of 245 basis points. The deal includes terms in 2030 and 2038. The bonds are callable at par in 2023.
Since Thursday, fixed-income markets have had a bounce in their step. That's largely due to the fact that late Wednesday, the economy staved off what many in the financial markets predicted would be an unmitigated disaster when it finally approved a spending measure.
In addition to ending the deadlock between Democrats and Republicans, the agreement returned federal workers to their jobs for the first time this month and ensured the U.S. government would not default on its debt obligations, at least until the early part of 2014.
Bond market investors have used the short-term reprieve to buy paper, traders said.
For the muni market, non-traditional investors have rapidly honed in on Puerto Rico credits, traders said. Yields on bonds from commonwealth issuers fell as much as 25 basis points Thursday, they added.
Beyond the commonwealth, the secondary market has been active in block trading, figures from the Municipal Securities Rulemaking Board's EMMA website show. Through lunchtime, more than 215 large blocks traded hands in the market.
Tax-exempt yields on the triple-A Municipal Market Data scale showed firming by up to two basis points beyond four years. They appear strongest between nine and 18 years.
On Thursday, The 10-year yield fell three basis points to 2.62%. The 30-year decreased four basis points to 4.22%. The two-year held steady at 0.35% for the fifth straight session.
Yields on the Municipal Market Advisors benchmark scale closed the day as much as four basis points lower. The 10-year yield fell two basis points to 2.76% while the 30-year yield tumbled four basis points to 4.35%. The two-year held at 0.55% for the seventh consecutive session.
By midday, Treasury yields slipped downward.
The benchmark 10-year and the two-year yields have each ticked down one basis point to 2.58% and 0.32%, respectively. The 30-year yield has dropped three basis points to 3.64%.
