Deals for the coming holiday-shortened week are looking scarce, after a sell-off toward the end of last week. Traders said some issuers may have thrown in the towel until the New Year after interest rates spiked on Thursday.
"It is very typical for last week to be a wind down week and this week to be all but dead. There might be a few deals that are being forced through the system," said a Virginia trader.
The lack of volume for this week is mostly attributable to the holiday week, as the total is expected to be plunge to $27.6 million, from last week's $5.05 billion. Issuance was less attractive after bond yields surged Thursday as equity markets rallied. The 10-year yield ended Friday at 2.08%, 10 basis points higher for the week ended on Dec. 12.
An estimated $21.9 million is expected for negotiated sale this week, according to Ipreo LLC and The Bond Buyer, versus a revised $4.11 billion that were sold last week, according to Thomson Reuters. Competitive sales for this week are expected to total $5.7 million, compared with $745.1 million for last week.
Looking ahead a few weeks to the New Year, on Jan. 6 Miami-Dade County, Fla., has a series of general obligation bonds being advised by Public Financial Management totaling $372 million. This one deal has three separate series, with proceeds being used for parks, public health, and the Building Better Communities Program. The deal is one of the first larger deals of the New Year that investors are likely consider as they look for fresh paper post-holiday, traders said.
"Early in the new year it will be a heavy re-investment period. I am very optimistic about the market in the New Year because the demand is there, there will be more cash in the system and I am expecting the treasury to be maybe a bit choppy, but flat and stable. It is hard to put a negative spin on it," said the Virginia trader.
