Bond yields at a glance

MBIS benchmark (~AA)

MBIS AAA

MMD AAA

U.S. Treasuries

10 year

2.652

2.541

2.46

2.84

30 year

3.082

2.977

3.00

3.08

MBIS indices are updated hourly on the Bond Buyer Data Workstation.

Although market conditions are not pristine, with rising yields and little primary action, market participants expressed reason to believe the first week of February will be a positive one.

Ipreo estimates volume will do the limbo and go even lower to $3.83 billion, from the revised total of $3.59 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $2.60 billion of negotiated deals and $1.23 billion in competitive sales.

Municipal buyside experts reacted to the threat of rising rates with hope for a positive outcome next week amid liquidity concerns and lower supply.

"As Treasury rates back up, the selling pressure in the municipal market searches for demand," Peter Delahunt, managing director of municipals at Raymond James & Associates, said on Friday afternoon. "Dealers and arb desks with heavier inventories are hard pressed to provide liquidity," he explained. "One large bid list did give a glimpse into the lack of depth in our market. New issue supply next week will be fairly light at $4 billion, however the market will look at the larger deals for demand and price discovery at the new higher rates."

Michael Pietronico, CEO, Miller Tabak Asset Management, said that right now the market is in a good buy zone spot for those investors who can handle some price volatility.

“We would urge investors not to try and pick the top in yields but to dollar cost average into tax-free municipal bonds of superior quality,” he said. “The recession will come the only unknown is the timing. Everything looks great right now in the economy which is reason to believe much of the good news has been priced in.”

There are only 11 deals on this week’s schedule of $100 million or larger, with the third and fourth largest of these being taxables, continuing an early 2018 trend. Three of those larger deals will come via the competitive route.

Goldman Sachs is set to price Harris County, Texas’ $567.2 million of toll road senior lien revenue bonds on Wednesday. The deal is rated Aa2 by Moody’s Investors Service and AA by Fitch Ratings.

JPMorgan is scheduled to price the State of Utah’s $326.425 million of general obligation on Tuesday. The deal is rated triple-A by Moody’s, S&P Global Ratings and Fitch.

Citi is slated to price the Dartmouth-Hitchcock Obligated Group, N.H.’s $302 million of taxable bonds on Wednesday. The deal is rated A by S&P and Fitch.

Citi is also expected to price the State of Delaware’s $250 million of taxable GO bonds on Wednesday for the Port of Wilmington Projects. The deal is rated triple-A by Moody’s, S&P and Fitch.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Feb. 2 were from New York, Georgia and California issuers, according to Markit.

In the GO bond sector, the New York City zeroes of 2038 traded 21 times. In the revenue bond sector, the Main Street Natural Gas Inc. of Ga.’s 4s of 2048 traded 42 times. And in the taxable bond sector, the California 2.193s of 2047 traded 42 times.

Week's actively quoted issues
California and New Jersey names were among the most actively quoted bonds in the week ended Feb. 2, according to Markit.

On the bid side, California taxable 7.55s of 2039 were quoted by 35 unique dealers. On the ask side, the New Jersey Turnpike Authority revenue 4s of 2043 were quoted by 241 dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 24 unique dealers.

Lipper: Muni bond funds saw inflows
Investors in municipal bond funds again put cash into the funds in the latest week, according to Lipper data released on Thursday.

The weekly reporters saw $235.926 million of inflows in the week of Jan. 31, after inflows of $781.160 million in the previous week.

Exchange traded funds reported outflows of $16.893 million, after outflows of $17.950 million in the previous week. Ex-ETFs, muni funds saw $252.819 million of inflows, after inflows of $799.110 million in the previous week.

The four-week moving average was positive at $789.939 million, after being in the green at $811.354 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.

Long-term muni bond funds had inflows of $170.114 million in the latest week after inflows of $772.983 million in the previous week. Intermediate-term funds had inflows of $264.852 million after inflows of $329.453 million in the prior week.

National funds had inflows of $347.233 million after inflows of $776.001 million in the previous week.

High-yield muni funds reported outflows of $143.414 million in the latest week, after inflows of $32.551 million the previous week.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.