The municipal market expects no fireworks on the new issuance front for this Fourth of July holiday week.
The market anticipates that municipal bonds expected to be sold this week will total a popgun-like $51.7 million. That compares with a revised $7.86 billion last week.
No deals of any size are on the docket. And many market participants will take the week off, industry pros said, leaving more than a few trading desks thinly populated.
Digging down into the numbers, $39.7 million in competitive offerings are scheduled for sale, compared with a revised $1.57 billion last week. Also, $12.0 million in negotiated deals are slated for sale, versus a revised $6.29 billion last week.
After an explosive June, which saw $40.72 billion in new issuance and five deals that totaled at least $1 billion, the holiday week is expected to hamstring July numbers, as it does most every year. And with $30 billion in July reinvestment money expected, demand for tax-exempt paper, already robust, should only build.
Against this pressure, historically low interest rates will continue to compel investors to seek yield farther out along the yield curve and further down the credit scale.
Triple-A yields failed to move at all last week. The benchmark 10-year stagnated for an 11th straight session at 1.86%, according to Municipal Market Data numbers.
The two-year held steady at 0.32% for a 21st straight session. The 30-year yield stood at 3.16% for a sixth consecutive day.
Anticipation for July’s reinvestment cash flood sparked demand last week, MMD analyst Domenic Vonella wrote in a research post. It’s expected to set the tone this week, as well.
“Muni bond inflows have also continued to look encouraging,” Vonella wrote, “likely supported by reinvestment needs as well as attractive ratios to taxables.”
Among the week’s biggest deals, arriving in the competitive market, Tulsa County, Okla., Independent School District 1 is expected to auction $38 million of combined purpose bonds.