Munis weakened Friday after strengthening for three straight days earlier in the week.
Yields for bonds maturing in six to seven years and in 19 to 29 years increased by as much as one basis point, according to the Municipal Market Data's triple-A scale. Yields for eight to 18 years jumped by two basis points.
"The MMD has drifted down over the past week or so a few basis points, the market is a bit flat," a trader in New York said.
Yields for two-year, 10-year and 30-year municipal bonds held steady across the curve, according to the Municipal Market Advisors 5% scale, at 0.18%, 2.17% and 3.43%, respectively.
Earlier in the week, market participants began redeeming bonds. According to Morgan Stanley's Fixed Income Strategy report, it's likely that bond redemptions will carry over into the next three months as supply is predicted to remain light. "We expect current relative-value levels to endure or strengthen (trend lower) in a stable rates market," wrote John Dillon, chief municipal bond strategist and managing director in the report.
Though muni technicals are favorable, low volatility is anticipated as the rates-driven selloff increases.
Dillon reported that the muni market can maintain its levels if treasuries stabilize or strengthen slightly.
"As of Thursday's close, week-over-week municipal yields declined across the board for 5-, 10- and 30-year MMD benchmarks by 2, 7 and 5 basis points, respectively," wrote Dillon.
Treasuries strengthened Friday, with the 30-year yields and the 10-year benchmark inching up one basis point each to 3.33% and 2.47%, respectively. The two-year note was unchanged at 0.38% from Thursday's market close.
The largest long term bond pricing scheduled week is a $431.2 million sale of certificates of participation from the Regional Transportation District of Colorado. The second biggest negotiated deal is the $340 million toll system refunding revenue bond from the Miami-Dade, County Expressway Authority.
Los Angeles County plans to sell $900 million in tax and revenue anticipation notes on Wednesday.
In the competitive market the Metropolitan Atlanta Rapid Transportation Authority is scheduled to auction $274 million of revenue bonds on Thursday, and Columbus, Ohio, is expected to sell $258.3 million on Wednesday.
In secondary market trading, New Jersey Tobacco Settlement Financing Corporation asset-backed bonds with a 5% coupon maturing in 2041 rose one basis point to 6.73%, while the Florida Hurricane Catastrophe Fund Financing Corp. revenue bonds with a 2.995% in 2020 climbed 4 basis points to 2.731%.
New Jersey Turnpike Authority revenue bonds with a 5% coupon in 2038 jumped 5 basis points to 3.81%. Texas Transportation Commission Highway Fund revenue bonds with a 5% coupon in 2034 fell one basis point to 2.93%.
