Trading on basic supply and demand patterns, the municipal bond market ended firmer Tuesday as buyers placed aggressive bets on limited supply.

While a flurry of the week’s deals hit the market Tuesday in anticipation of Wednesday’s Federal Open Market Committee meeting announcement, traders cautioned that only $3.5 billion in total supply was expected this week — far from an overwhelming amount.

“It’s a very competitive market with light supply this week and Tuesday is a big day,” an Atlanta trader said. “There is not that much to digest but with the strength of the market Monday, it feels better. There is a lot of momentum off these new deals.”

This trader said the market felt two basis points firmer, much less than the nearly 10-basis-point drop in yields Monday.

In a sign of demand, nearly $500 million of New York’s Empire State Development Corp., priced richer than Monday’s Municipal Market Data scale on shorter maturing bonds but were priced cheaper than the scale on longer-maturing bonds. One large deal in the negotiated market, $128 million of Colorado Spring utilities system improvement revenue bonds lowered yields as much as 10 basis points from retail pricing Monday.

“Deals are received fairly well. It seems like demand is high,” a San Francisco trader said. “Taxes are only going to go up so munis should do well.”

This trader said he is focused on the secondary market but cheap deals were hard to find. “I haven’t seen anything I like. It seems like the same stuff we’ve been seeing. But for the most part people will focus on the primary today.”

Other traders said secondary activity also helped to drive the market higher. “There is good secondary activity and a lot of bonds are disappearing,” the Atlanta trader said. “People are light with inventory and trying to replace it so that’s helping drive the market.”

In the largest deal of the day, Bank of America Merrill Lynch won the bid for $478.2 million of Empire State Development Corp. state personal income tax revenue bonds, rated AAA by Standard & Poor’s and AA by Fitch Ratings.

Yields ranged from 0.30% with a 5% coupon in 2015 to 3.40% with a 5% coupon in 2025. The bonds are callable at par in 2023. Bonds with 5% coupons maturing in 2015 and 2016 were priced 13 and eight basis points richer than Monday’s MMD scale. Bonds maturing in 2017 and 2018 were priced right on the scale. Bonds with 5% coupons maturing between 2019 and 2025 had spreads ranging from 13 basis points to 32 basis points cheaper than the MMD scale.

Also in the competitive market, Ohio auctioned $400 million of common schools general obligation bonds in three pricings, rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch.

Bank of America Merrill won the bid for $183.3 million. Yields ranged from 3.14% with a 5% coupon in 2024 to 4.50% priced at par in 2033. The bonds are callable at par in 2021.

Citi won the bid for $116.7 million. Yields ranged from 0.18% with a 1% coupon in 2014 to 2.87% with a 5% coupon in 2023.

JPMorgan won the bid for $100 million of taxable bonds. The bonds were priced at par to yield 0.28% in 2014 to 3.69% in 2023. Spreads ranged from five to 83 basis points above the comparable Treasury yield.

JPMorgan won the bid for $331.7 million of Virginia College Building Authority educational facilities revenue bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.

Yields ranged from 0.36% with a 4% coupon in 2015 to 4.55% with a 4.5% coupon in 2034. The bonds are callable at par in 2023.

In the negotiated market, the largest deals also priced. Bank of America Merrill Lynch held preliminary pricing for $287.3 million of Washington federal highway grant anticipation revenue bonds, rated Aa3 by Moody’s and AA by Standard & Poor’s. Yields ranged from 0.58% with a 5% coupon in 2015 to 3.60% with a 4% and 5% coupon in a split 2024 maturity. The bonds are callable at par in 2023.

Ramirez & Co. held preliminary pricing for $253.8 million of Dallas-Fort Worth International Airport joint revenue refunding bonds, rated A2 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch. Yields ranged from 1.21% with a 3% coupon in 2016 to 4.94% with a 5.25% coupon in 2033. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.

In the secondary market, trades compiled by data provider Markit showed firming.

Yields on Boston 4s of 2032 fell five basis points to 4.16% and New York City Municipal Water Finance Authority 5s of 2047 fell three basis points to 4.85%.

Yields on Texas’ Grand Parkway Transportation Corp. 5s of 2053 and Louisiana 4s of 2030 fell three basis points each to 5.30% and 4.27%, respectively.

Yields on Ohio’s Buckeye Tobacco Settlement Financing Authority 5.875s of 2047 dropped two basis points to 8.28% and Campbell, Calif., Unified High School District 5s of 2034 slipped one basis point to 4.39%.

On Tuesday, yields on the triple-A MMD scale ended unchanged.

The 10-year and 30-year yields closed flat at 2.74% and 4.33%, respectively. The two-year was steady at 0.43% for the 44th straight session.

Yields on the Municipal Market Advisors scale also ended steady.

The 10-year and 30-year yields were unchanged at 2.91% and 4.42%, respectively. The two-year closed unchanged at 0.55% for the 23rd session.

Treasuries posted gains for the fifth consecutive session. The benchmark 10-year and 30-year yields slid three basis points each to 2.85% and 3.84%, respectively. The two-year yield fell two basis points to 0.38%.

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