The tax-exempt market turned its attention to the primary market as deals starting to price in the new issue market.
Outside the primary market, municipal bond traders said the market had a positive tone, though trading volume is still subdued from previous levels.
"It feels like it has a little better tone but it's hard to get a pulse," a trader located in the Southwest region said. "One day it feels flat lined and another day it's picking up. But it has a positive tone."
This trader added that munis are trading off the 10-year Treasury. "As long as the 10-year Treasury is trading below 1.96%, the muni market has a bid. If it gets above that, bids start going away and it gets weaker. I think traders are worried about it breaking above 2.00%."
And with muni yields still relatively low, he added zero-coupon bonds are outperforming. "There is a lot of trading in zeros. People are looking at that and seeing there is no reinvestment risk and they are picking up 20 to 30 basis points to the current coupon."
In the primary market Tuesday, Raymond James is expected to price $211.5 million of Lewisville, Texas, Independent School District unlimited tax refunding bonds, rated triple-A and guaranteed by the Texas Permanent School Fund Guarantee Program.
Citi priced for retail $207 million of Oregon general obligation refunding bonds, rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings. Institutional pricing is expected Wednesday. Prices were not immediately available.
Bank of America Merrill Lynch priced for retail $158.5 million of Oklahoma City Water Utilities Trust water and sewer system revenue refunding bonds, rated Aa1 by Moody's and AAA by Standard & Poor's. Institutional pricing is expected Wednesday. Prices were not available by press time.
In the competitive market, Goldman, Sachs & Co. won the bid for $331.6 million of San Francisco Public Utilities Commission wastewater revenue bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Yields ranged from 2.01% with a 5% coupon in 2023 to 3.60% with a 4% coupon in 2042. The bonds are callable at par in 2022.
B of A Merrill won the bid for $152.4 million of Los Angeles, Calif., solid waste resources revenue bonds, rated Aa2 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.
Yields on the first pricing, $71.7 million of revenue bonds, ranged from 0.20% with a 4% coupon in 2014 to 2.50% with a 2.5% coupon in 2027. The bonds are callable at par in 2023.
Yields on the second pricing, $80.7 million of revenue refunding bonds, ranged from 0.17% with a 5% coupon in 2014 to 2.78% with a 3% coupon in 2029. The bonds are callable at par in 2023.
On Monday, municipal bond market reads finished steady to stronger.
The Municipal Market Data triple-A GO scale ended steady to two basis points firmer. The two-year yield fell two basis points to 0.32%. The 10-year yield was steady at 1.80% for the third straight session while the 30-year yield closed flat at 2.86% for the fifth straight session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale ended steady for the second straight session. The 10-year yield and the 30-year yield were flat for the third consecutive session at 1.83% and 2.94%, respectively. The two-year closed unchanged at 0.35% for the 11th session.
Treasuries were weaker Tuesday afternoon. The benchmark 10-year yield and the 30-year yield jumped three basis points each to 1.99% and 3.19%, respectively. The two-year was steady at 0.27%.
