Quantcast

Market Post: Let the Muni Rally Continue

APR 18, 2011 1:51pm ET
Print
Email
Reprints
Twitter
LinkedIn
Facebook
Google+

NEW YORK – Traders say the municipal bond market is completely unaffected by Standard & Poor’s revising its outlook on U.S. Treasury debt to negative from stable.

“I don’t see much a muni response at all,” said a trader in California. “We haven’t been following Treasuries so it’s really a non-event.”

An early read showed short- and intermediate-term munis yields falling one to three basis points, while maturities beyond 2029 were flat to one basis point lower, according to Municipal Market Data.

“I wouldn’t say it’s a rally of huge proportions, but it says something that there’s a rally at all” the trader said. “A lot of it has to do with the lack of paper out there.”

Total new volume in this holiday-shortened week is expected at $1.43 billion, versus $2.48 billion last week. Volume in the first-quarter averaged roughly $3 billion per week, versus an average $8 billion in 2010.

Monday features no significant deals.

Munis have now been rallying for five consecutive days. The 10-year tax-exempt yield fell 12 basis points to 3.15% last week, reversing a four-week trend of rising yields. The two-year yield ended at 0.63% and the 30-year muni finished at 4.78%.

“We were bleeding slowly for two months and now we’re kind of ratcheting up a bit,” the trader said.

Cash flowed out of Treasuries when the Standard & Poor’s news hit the wires, but the market quickly stabilized as investors fled from equities. The 10-year Treasury yield was recently down five basis points from Friday's close, at 3.36%.

The Dow Jones Industrial Average shed 212 points, or 1.72% as of 1:30 Eastern Time. The S&P 500 index was 20 points lower, a loss of 1.59%.

The muni market received confirmation over the weekend that the $1.3 billion offering from Liberty Development Corp. was pulled last week because of a “volatile rate environment.”

“We made the decision to delay the Tower 4 Liberty Bond sale due to market considerations,” said a joint-statement from Silverstein Properties and the Port Authority of New York & New Jersey. “We plan to move forward with the Liberty Bond financing once the municipal markets have settled down and we have addressed investor issues.”

markets
markets
markets

Social

facebook
linkedin

New York's budget leaves it at risk of becoming one of only five states that do not allow the use of design-build procurement to deliver public infrastructure projects.

Upcoming Events

the bond buyer conferences
Already a subscriber? Log in here
Please note you must now log in with your email address and password.