Market Post: Secondary a Bit Weaker as Remainder of Primary Prices

The tax-exempt market waited for the remainder of the large deals in the primary market to price after a few balances were left over from Tuesday's deals.

Overall traders said the market felt slightly weaker.

"The market is opening quiet out of the gates," a Chicago trader said. "There are not as many bid-sides floating around but there were a few new issues balances that were cut. The secondary is not really reacting. It's not carrying over as there aren't aggressive sellers in the secondary yet."

Still, the market felt a little weaker and he added traders are looking to one of the larger competitive deals, $236.5 million of triple-A rated Virginia general obligation bonds, for direction.

Elsewhere in the primary, Goldman, Sachs & Co. is expected to price $335 million of Johns Hopkins University taxable bonds.

JPMorgan should price $289.8 million of San Diego County Water Authority water revenue refunding bonds, rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.

Morgan Stanley is expected to price $111.9 million of Wisconsin clean water refunding bonds.

In the competitive market, Victor Valley Union High School District, Calif., should auction $212.8 million of general obligation bonds, rated A-minus by Standard & Poor's.

The Maryland Department of Transportation is expected to price $165 million of revenue bonds, rated Aa1 by Moody's and AAA by Standard & Poor's.

On Tuesday, municipal bond market reads finished steady to weaker.

The Municipal Market Data triple-A GO scale ended steady to two basis points weaker. The 10-year yield rose one basis point to 1.81% while the 30-year yield increased two basis points to 2.88%. The two-year was steady at 0.32% for the second session.

The Municipal Market Advisors 5% coupon triple-A benchmark scale ended steady to one basis point higher. The 10-year and 30-year yields rose one basis point each to 1.84% and 2.95%, respectively. The two-year closed unchanged at 0.35% for the 12th session.

Treasuries were weaker Wednesday morning. The benchmark 10-year yield and the 30-year yield jumped four basis points each to 2.02% and 3.23%, respectively. The two-year yield rose one basis point to 0.29%.

In economic news, retail sales rose 0.1% in January, on par with the 0.1% increase expected by economists. Excluding autos, sales grew 0.2%, higher than the 0.1% estimated by economists.

"Although retail sales are off to only a modest gain in January, following on from the strength of sales in November and December, this does not represent a loss of momentum in sales growth," wrote economists at RDQ Economics. "We believe the level of real PCE in January will be some 3% ahead of its level in the fourth quarter and our projection of 1.4% for real PCE growth in the first quarter is beginning to look a little low."

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