The municipal bond market has continued on its course Monday, with yields firming beyond the front end of the curve.
The market witnessed yields rallying all last week on modest issuance; on Friday, the market saw strengthening by as much as 10 basis points. And though they remain firm in tone, tax-exempts' downward trajectory should moderate until more issuance arrives to give it direction, a trader in New York said.
"We had a pretty good pop on Friday; the scale was up eight-to-10 basis points," he said. "It seems to be continuing on this morning. But I still don't think there are enough bonds around."
Treasuries
Muni secondary activity appears manageable thus far, with some paper out for the bid, he added. Few large blocks fill traders' screens, though.
"When we get more supply around here, that will dictate where we go," he said. "But right now, we still seem attractive."
Indeed, supply has been weak the past two weeks, as it typically is this time of the year. The past week offered just $1.78 billion in new deals. The prior week saw just $10.8 million in new issues.
Potential long-term volume for this week is expected to pick up, totaling an estimated $4.88 billion, up from total sales of $1.78 billion last week.
That breaks down into $3.61 billion scheduled for negotiated sale this week, versus a revised $841.1 million that were sold last week. Bonds scheduled for competitive sale this week total $1.27 billion, compared with $939.6 million last week.
Further help may be on the way soon. The Bond Buyer's 30-day visible supply for Monday shows $7.96 billion planned.
Leading all deals this week, JPMorgan expects to price $775 million New York City Transitional Finance Authority tax secured subordinate bonds. Retail order periods are expected Tuesday and Wednesday, followed by pricing Thursday.
RBC Capital Markets plans a $468 million Minnesota state general fund appropriation bond sale on Tuesday.
Yields on the Municipal Market Data triple-A scale have started the week lower beyond the front end of the yield curve. Credits maturing after two years have firmed by as much as three basis points.
The 10-year triple-A yield closed Friday seven basis points lower, at 2.64%. The 30-year dropped nine basis points to 4.01%, while the two-year yield slipped one basis point to 0.34%.
The Municipal Market Advisors benchmark triple-A scale saw yields fall Friday by as much as 10 basis points across the curve. The 10-year triple-A yield fell eight basis points to 2.63%. The 30-year plummeted 10 basis points to 4.20%, while the two-year dipped two basis points to 0.33%.
Treasuries continue to firm, with the 10-year yield dipping three basis points to 2.85%. The 30-year yield has slipped one basis point to 3.80%, while two-year yield has dropped two basis points to 0.37%.
