The tax-free municipal market on Monday got off to a solid start to a busy week that’s set to bring a large amount of new issue volume and government economic data that was delayed by a shutdown in Congress.
“Today was slow and steady,” one trader in California said in an interview. “We haven’t seen enough trading going on to drive prices one way or the other. We’re watching tomorrow, to see how the market takes the economic data is it old news, or is it something we haven’t had?”
The Labor Department will announce an employment situation report, which was delayed from its original release on Oct. 4 due to budget issues surrounding a government shutdown. Construction spending figures, also delayed due to the shutdown, will be announced tomorrow.
“Because of the shutdown a lot of the data is going to come in this week,” a New York-based trader said. “I don’t think it will be anything that will necessarily hurt the market, but it won’t make it stronger. If anything it may lead to something a little weaker.”
The Bond Buyer’s most recent 30-day visible supply showed $8.253 billion in potential volume this week, almost twice as much as the $4.388 billion introduced in the week ended Oct. 18. That includes $5.669 billion in negotiated sales and $2.585 billion competitive, compared with $3.769 billion and $620 million last week, respectively.
“It’s pretty quiet today, a lot of people are looking at the new issue,” a New York-based trader said inan interview. “The [New York City] transitional finance authority deal is doing well, being relatively well-received. As far as bid, everything’s cheaper based on all these new issues flowing into the market.”
Traders were relieved to start a week without negative Puerto Rico news leading headlines, the trader said.
“Bids have improved a little bit thankfully,” the trader said. “I’m not seeing a huge amount of Puerto Rico volume out today, hopefully the fire sale is over and we can go back to them a little bit more appropriately.”
JPMorgan priced $1.61 billion of California general obligation bonds today, rated A1 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings.
Yields on institutional pricing for $708 million of the GOs ranged from 1.58% on 4% coupon bonds maturing in 2018 to 4.92% on 4.875% coupon bonds maturing in 2043. Bonds maturing in 2014 were offered in a sealed bid. They are callable at par in 2023.
On $660 billion of various purpose GOs, yields ranged from 1.48% with 2% coupon maturing in 2018 to 4.6% with 4.5% coupons maturing in 2032. The bonds are callable at par in 2023.
Goldman, Sachs & Co. brought $650 million of New York City transitional finance authority bonds to market as well on Monday.
Bonds with a 3% coupon maturing in 2016 were offered with a yield of 0.62%, while 4.5%-coupon bonds maturing in 2042 came with a 4.65% yield. Bonds maturing in 2015 were offered as a sealed bid. The bonds are callable at par in 2023.
Minnesota said Monday it would push its $767.6 competitive general obligation sale slated for Tuesday off until Thursday. State finance officials made the decision late Friday due to the volume of deals selling Tuesday and the scheduled release of updated unemployment data. The state will take bids separately on three series of bonds including $282.6 million of GO various purpose paper, $112 million of GO state trunk highway bonds repaid with transportation-related revenues, and up to $373 million of GO various purpose refunding bonds.
Yields on the triple-A Municipal Market Data scale were mostly unchanged, with yields jumping as much as one basis point on bonds maturing in from 2020 to 2043.
Yields on the Municipal Market Advisors benchmark scale ended Monday as much as two basis points higher. The 10-year yield gained one basis point to 2.76%, while the 30-year yield remained at 4.35%. The two-year stayed at 0.55% for the ninth straight session.
Treasury yields slipped across the curve, with the benchmark 10-year and 30-year yields each rising two basis points to 2.60% and 3.67%, respectively, from Friday. The 2-year yield remained steady at 0.32%.