With a healthy and diverse selection of primary market options available to traders later this week, the municipal market opened slowly on Monday morning, with traders weighing decisions for how to attack the week.
Goldman Sachs took retail orders on Monday morning for the week's third largest scheduled issuance — the federally taxable $350 million California Earthquake Authority revenue bond deal — in advance of its scheduled Tuesday institutional pricing, according to a New York based trader.
The strengthening municipal market scales are expected to push borrowing costs down and further compress yields, frustrating traders hungry for yield.
"There's just no relief to be had in this market," said the trader. "These issuers are striking the market at the very best time - for them, not me."
No deals either negotiated or competitive over $100 million are scheduled to close on Monday.
Yields on bonds maturing between 2022 and 2044 strengthened up to two basis points as yields on bond maturing in 2021 strengthened one basis point on Monday morning, according to Municipal Market Data's triple-A 5% curve provided by TM3. Yields on bond maturing between 2015 and 2020 held steady.
Contributing to municipal strength was a tightening Treasury market. Yields on the two-year note fell two basis points to 0.39% from Friday's close as yields on the 10-year dropped three basis points to 2.26%. Yields on the 30-year firmed one basis point to 3.04%.
Without traffic in the primary, secondary trading stalled on Monday morning, with no one security picking up more than $15 million in trading as of 1 p.m., EST, according to Municipal Securities Rulemaking Board's disclosure website, EMMA. As the primary becomes more active as the week progresses, the secondary is expected to match the interest level, said the New York based trader.
