The tax-exempt market ended the week on a steady note Friday with yields closing mostly flat across the board.
Traders said Friday’s session opened up stronger, but pared gains on an overall risk-on trade as the day wore on. The steady tone comes after a steady session Thursday and weaker trading earlier in the week.
“We are in limbo at the moment,” a Chicago trader said. “We are treading water. The market overall was up this morning and people felt a lot better but they are less enamored now.”
He added that despite negative GDP and higher unemployment, stocks are higher and putting pressure on fixed income assets across the board.
Traders Friday morning noted the market felt stronger. “The market is OK today,” a New Jersey trader said. “It’s been up and down. This morning seemed softer but Treasuries did an about-face and we’re firm in the muni market. The bid side is relatively strong. So we are sideways to stronger by one to two basis points.”
Overall for the week, this trader said, “New issues this week were pretty well received but there was not a lot of activity.”
In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.
Yields on Boston 4.4s of 2026 and Hawaii Airport System 5.25s of 2021 plunged four basis points each to 2.52% and 1.88%, respectively. Yields on New York City Municipal Water Finance Authority 5s of 2045 fell two basis points to 3.30%.
Other trades were weaker. Yields on Scottsdale, Ariz., 4s of 2023 increased two basis points to 2.00% while New York City Transitional Finance Authority 5s of 2037 rose one basis point to 3.12%.
Municipal bond market reads showed a steady market Friday after a slightly stronger Thursday.
Yields on the Municipal Market Data triple-A GO scale finished unchanged across the yield curve. The 10-year yield closed at 1.82% for the third session while the 30-year closed at 2.86% for the second session. The two-year held at 0.34% for the fifth session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale also showed unchanged yields. The 10-year yield and the 30-year yield held at 1.84% and 2.94%, respectively, for the third consecutive trading session. The two-year closed unchanged at 0.35% for the fifth session.
Treasuries posted losses Friday. The benchmark 10-year yield and 30-year yield jumped four basis points each to 2.01% and 3.21%, respectively. The two-year yield was stronger, falling one basis point to 0.27%.
In the primary market next week, the municipal bond market can expected $4.79 billion in new issuance, up from this week’s revised $5.98 billion. In negotiated deals, $2.96 billion is expected to hit the market, up from this week’s revised $4.48 billion. On the competitive calendar, $1.83 billion is expected to be auctioned, up from this week’s revised $1.6 billion.
