Wednesday's municipal and Treasury markets will likely be most influenced by gross domestic product data in the morning and the Federal Open Market Committee statement in the afternoon, said market participants.
"I think the thing to bear in mind is that we have a huge economic calendar this week, people are reluctant to do anything before they find out what the Fed is doing and before payrolls are announced," a trader in Chicago said earlier in the week. "People are apprehensive to do anything before the numbers come out."
The 30-year Treasury yield hit a 2014 low on Tuesday, as volatility increased in equities, thrusting investors into the municipal market. The 30-year yield fell to 3.23% while the VIX, an index that measures volatility in the S&P 500, rose 5.73% on Tuesday, climbing throughout the day, after the U.S. announced tighter sanctions on Russia in the energy, arms and finance sectors.
The uncertainty strengthened the municipal market, with yields for the 10-year falling by two basis points to 2.17% and the 30-year dipping one basis point to 3.37%, according to Municipal Market Advisors data. The two year held steady at 0.31%.
Amidst the onslaught of data, the largest deal on this week's competitive calendar is scheduled to sell Wednesday and traders anticipate it will likely benefit from the combination of a light issuance week and large inflows.
The city of Suffolk, Va., will auction $124.745 general obligation and refunding bonds at 11am ET, according to data provided by TM3. The issue has serial maturities ranging from 2015 to 2042 with an optional call feature on Feb. 1, 2024.
Standard & Poor's rates the deal AAA, Fitch Ratings gives it a AA-plus, and Moody's Investors Service rates the deal Aa1.
Proceeds will go toward various capital improvement projects, as well as retire some of the issuer's outstanding debt. The issuance will raise the city's debt load to $361.4 million.
Harris County, Texas, will also tap the competitive market on Wednesday with a $55.65 million unlimited general obligation tax bond, according to data provided by TM3. Maturities range from 2015 to 2038 and the deal has a call feature on Sept. 1, 2022.
The proceeds will redeem $27.665 million of Series 2013 bond anticipation notes, and finance various capital improvements. The bonds are rated A2 by Moody's.
