NEW YORK – The California municipal market was unchanged with a slightly firmer tone Monday amid light to moderate secondary trading activity.
The Municipal Market Data triple-A 10-year scale fell one basis point Monday to 3.33%, the 20-year was unchanged at 4.57%, and the scale for 30-year bonds held at 4.90%.
“Thin secondary supply and very modest primary scheduling still told the Street that the path to least resistance is to lower yields,” wrote Randy Smolik in the daily MMD commentary. “But, rather than showing their hand today, dealers seemed to want to hold back and wait for tomorrow's broad array of competitive deals to be priced before giving the market a significant push.”
Monday’s triple-A muni scale in 10 years was at 92.0% of comparable Treasuries and 30-year munis were at 104.9% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 110.4% of the comparable London Interbank Offered Rate.
Treasuries mostly showed gains Monday. The benchmark 10-year note was quoted recently at 3.62% after opening at 3.69%. The 30-year bond was quoted recently at 4.67% after opening at 4.75%. The two-year note was quoted recently at 0.85% after opening at 0.83%.
“The municipal bond market performed pretty much in line with Treasuries as rates rose earlier in the week, but then rallied modestly as Treasuries continued to fade,” wrote George Friedlander, municipal strategist at Citi, in a research note. “The muni market is still struggling to find its levels in the face of abnormally light supply, which could continue through March.”
“We continue to be concerned that, as supply finally rebounds, sectors that have not attracted demand from crossover buyers will have to widen out versus sectors that have crossover demand,” Friedlander wrote. “We continue to find paper in the 15- to 20-year range attractive but would keep credit quality quite high for now. When issuance finally rebounds, as we expect it to in April, we anticipate that there will be more attractive offerings of medium-quality paper as the market struggles to find sufficient buyers in this quality range.”
The economic calendar was light Monday.
Previous Session's Activity
The most actively traded security in the state yesterday was California Health Facilities Financing Authority 7.875s of 2026, which traded 267 times at a high of 101.414 and a low of 99.614.
