The municipal bond market on Wednesday was digesting the supply that priced in the previous two sessions.
There are no major deals on tap for the day and traders will be eying Puerto Rico developments, the direction of muni yields and the clock as the countdown toward the long holiday weekend begins to tick.
Secondary Trading
Treasury prices were lower on Wednesday with the yield on the two-year Treasury note rising to 0.68% from 0.64% on Tuesday, while the 10-year yield rose to 2.42% from 2.32% and the 30-year yield increased to 3.22% from 3.09%.
The yield on the 10-year benchmark muni general obligation closed unchanged on Tuesday from 2.28% on Monday, while the yield on the 30-year GO was flat from 3.28% according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 97.6% versus 98.3% on Monday, while the 30-year muni to Treasury ratio stood at 105.6% compared to 106.1%, according to MMD.
Puerto Rico GOs Trading Higher
Prices of Puerto Rico debt on Wednesday began to firm after two days of downward movement. Puerto Rico bonds began their descent on Monday after a published report quoted Gov. Alejandro García Padilla as saying the commonwealth cannot pay its $72 billion in debt.
Among actively traded bonds on Wednesday, the Puerto Rico commonwealth Series 2014A general obligation 8s of 2035 were trading as low as 68.25 cents on the dollar, according to the Municipal Securities Rulemaking Board's EMMA website, a high yield of 12.301%. There were five trades totaling $11 million.
This contrasts to trading on Tuesday, when the commonwealth GO traded as low as 64 cents on the dollar, according to EMMA, a high yield of 13.13%. There were 110 trades totaling $223 million. On Monday, the GOs traded as low as 68.30 cents on the dollar, according to EMMA, a high yield of 12.291%. There were 93 trades totaling $141 million. On Friday, the GOs traded as low as 76.75, according to EMMA, a high yield of 10.874%. There were 19 trades totaling $22 million.
Separately on Wednesday, the commonwealth Series 2012A GO public improvement 5s of 2041 also rose and were trading as low as 57.25 cents on the dollar, according to EMMA, a high yield of 9.439%. There were two trades totaling $40,000.
On Tuesday, the 5s of 2041 were trading as low as 51.625 cents, a high yield of 10.434%, and was the most active issue of the day, according to EMMA. There were 125 trades totaling $44 million. On Monday, the bonds traded at a low price of 51.716, a high yield of 10.416%, according to EMMA, while the bonds traded on Monday at a low price 63.033, a high yield of 8.571%. On Friday, the bonds traded as low as 63.033, a high yield of 8.571%.
Primary Market
There were no major negotiated deals on the calendar for Wednesday. And there were only a handful of competitive bond sales slated, none over $10 million.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,055 trades on Tuesday on volume of $8.875 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.25 billion to $5.58 billion on Wednesday. The total is comprised of $2.52 billion competitive sales and $3.06 billion of negotiated deals.
