Kate Smith

Municipal scales tightened on Tuesday into Wednesday morning following two highly successful deals from the state of California and New York City. The strength will help the handful of deals expected to tap the market on Wednesday.

Tuesday's primary calendar expects to price the mammoth New York City and state of California deals, pricing more volume than the market has seen in weeks.

Last week's secondary market activity was driven by the primary market, a trend expected to continue into this week's market led by California and New York City.

The municipal market held its breath on Monday morning, waiting for the week's true volume, which will hit on Tuesday and Wednesday.

In an exclusive press briefing with Blackrock, strategists anticipated a ceiling of $5 billion of refunding opportunities, leaving investors with just new money offerings to fill portfolios.

The municipal market stayed flat on Friday, digesting a heavy week of issuance and preparing for an even larger week ahead.

After an active week, municipals will cool down on Friday.

Treasuries strengthened on Thursday morning as investors anticipated European currency volatility if Scotland is successful in achieving its independence.

Contrary to conventional economic theory, municipal pricing tightened on Wednesday as supply flooded into the primary market. Traders noted the movement was typical, as demand often chases supply after light calendar periods.

Tuesday's active primary continued on Wednesday, with investors piling into deals across the rating spectrum.

Hungry for new issues, traders have piled into Tuesday morning's primary, causing aggressive pricing and repricings.

The week's anticipated heaviest day in the primary hits on Tuesday, with five of the top 10 deals tapping the market. Traders expect activity in the secondary to follow, and scales to be impacted by the flurry of new money.

Light secondary activity on Monday followed the primary’s small calendar, with the New York City Municipal Water Department picking up bids ahead of a new bond issuance slated for institutional buyers on Tuesday.

Monday morning's activity in the primary and secondary was slow as traders were hopeful for a heavy calendar week.

A popular front end of the curve coupled with the placement of a century bond indicate that the market has not quite made up its mind as to what the fourth quarter may hold for the municipal market.

Barclays priced a rare century bond on Thursday for the Cleveland Clinic, demonstrating the market's faith in the health system's ability to mitigate risk usually associated with a 100-year maturity.

The secondary market saw early morning activity on Friday, picking up trades on a Colorado school district bond and the New York City Transitional Finance Authority. Meanwhile, Treasuries weakened in the intermediate to long end of the curve.

This week's short-term California RAN deal picked up heavy secondary market activity during Thursday' morning trading session, demonstrating the market's continued fear of rising interest rates.

The primary calendar volume will retreat on Thursday with no deals scheduled for more than $50 million in either the long-term competitive or negotiated markets.

The New York City Municipal Water Department deal gives the market yield, thanks to its frequency in the primary market. Meanwhile, yields rise in the secondary market, echoing softening in the Treasury markets.