Some trading in maturities at the long end of the municipal bond yield curve has given the market a somewhat stronger tone as Tuesday's session crosses noon.
The muni market appears to be coasting on
"The front end is just so ultra-tight; the ratios are very ugly," he said. "The market's slightly firmer, if at all. It's definitely not weaker. We continue to grind higher, but it's not anything earth-shattering."
Muni sales this week are expected to continue their measured rise. Anticipated new issue volume should weigh in at $5.00 billion, against $3.81 billion last week.
This breaks down into $3.30 billion scheduled for negotiated sale and $1.70 billion competitive.
Bank of America Merrill Lynch on Wednesday is expected to price a $1 billion taxable issue for Port Authority of New York & New Jersey, structured as a bullet maturity in 2046.
Barclays priced for retail $650.4 million of New York State Thruway Authority general revenue bonds in the negotiated market. They are rated A2 by Moody's Investors Service and A by Standard & Poor's.
Yields ranged from 0.69% with coupons of 4.00% and 5.00% in a split maturity in 2017 to 4.70% with a 4.625% coupon in a split maturity in 2044. Credits maturing in 2015 and 2016 were offered in a sealed bid. Those bonds maturing from 2026 through 2028 and from 2030 to 2034, as well as some in 2044, were not offered to retail.
The bonds are callable at par in 2024. Pricing for institutions should follow Wednesday.
Retail investors appear to be waiting to see how the New York Thruway loan performs, the trader in Chicago said. "It looks OK, considering there aren't a lot of spread credits out there," he added.
On the competitive side of the ledger, the state of Washington on Wednesday plans to auction $355.1 million of various purpose general obligation bonds, as well as $273.9 million of motor vehicle fuel tax GOs.
"We're not seeing a lot of follow-through, so far," the trader said. "But we do have Washington coming competitively tomorrow, so hopefully that will set the tone for things going forward."
Demand, as represented by muni bond mutual fund flows, returned to the marketplace, at least for a week. Those muni bond funds that report flows weekly recorded $103 million of inflows for the week ended Jan. 15, Lipper FMI numbers showed, marking the end of 33 continuous weeks of outflows.
Yields on the Municipal Market Data triple-A scale opened Tuesday flat across the curve, according to a late-morning read.
The 10-year triple-A yield decreased two basis points Friday to 2.59%. The 30-year fell three basis points to 3.90%, while the two-year held at 0.34% for a 10th straight session.
Yields on the Municipal Market Advisors benchmark triple-A scale mostly firmed, falling across most of the curve by as much as three basis points.
The 10-year triple-A yield slipped one basis point to 2.59%. The two-year held at 0.34%, while the 30-year decreased three basis points to 4.11%.
Treasury yields are mostly flat through Tuesday morning. The 10-year yield has hovered around 2.83%. The two-year remained at 0.39%, while the 30-year yield has ticked down one basis point to 3.75%.
