The municipal market started Wednesday morning slightly weaker in tone as dealers worked to unload some of their balances.
The secondary has so far taken a back seat to
"I'm seeing nice cuts coming out from aged inventory from the dealer community this morning," he said. "It looks like people are trying to unload some balances from past deals, definitely with some lower coupons."
Lower-coupon offerings in the secondary market are seeing additional concessions to get them off dealers' books, he added.
This week, muni volume is expected to climb to $8.18 billion from $6.34 billion last week. That boils down to $6.62 billion in negotiated issuance and $1.56 billion in competitive deals.
California general obligation bonds should anchor the week's volume. JPMorgan is expected to hold a second day of retail for $2.16 billion of California various purpose GOs.
The bonds are rated A1 by Moody's Investors Service, A by Standard & Poor's, and A-minus by Fitch Ratings. Institutional pricing should follow Thursday.
"It was reported that retail orders were received for about a third of the issue on day one," Alan Schankel, a managing director at Janney Capital Markets, wrote in a research post.
Goldman, Sachs & Co. is expected to price $364.2 million of California federally taxable GOs. The bonds have a 0.25% coupon in 2015 and 0.375% coupon in 2016. Spreads were 50 and 65 basis points above the comparable Treasury yield.
Goldman is also expected to price a remarketing of $228 million of taxable California Build America Bonds. The bonds have a 2.75% coupon in 2039 with a 175 basis point spread above the comparable Treasury.
Goldman took indications of interest on both issues Tuesday.
Wells Fargo Securities should price $625.7 million of Empire State Development Corporation, N.Y., bonds.
There was no read on the tax-exempt market at press time from the Municipal Market Data triple-A GO scale. Yields on Tuesday ended as much as four basis points higher: the 30-year yield rose one basis point to 3.09%. The 10-year closed steady at 1.99% while the two-year finished flat at 0.31% for the 16th straight session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale were mostly unchanged. The 10-year yield and the 30-year yield finished steady at 2.00% and 3.16%, respectively. The two-year held at 0.33% for the 11th session.
Treasuries started Wednesday slightly weaker beyond the front end of the curve. The benchmark 10-year yield and the 30-year yield rose two basis points each to 2.05% and 3.24%, respectively. The two-year yield stayed at 0.27%.
In economic news, the Commerce Department reported Wednesday that retail sales rose 1.1% last month. They increased a revised 0.2% in January.
Retail sales grew in February more than at any time since September 2012, when they increased 1.2% when retail sales were up 1.2%. Economists surveyed by Thomson Reuters predicted an increase of 0.5%.
