The municipal bond market ended steady to stronger Monday after a day that saw mostly muted activity.

Despite several retail order pricings being released, most market participants said the trading session was quiet.

“It’s was very quiet this morning and a couple of new issues are pricing but generally, it’s a quiet Monday,” a New York trader said. “The market is about flat.”

Others agreed. “Munis aren’t getting any action,” a second New York trader said. “It’s pretty quiet,” adding most traders were waiting for the majority of supply to hit the market.

Still others noted the market felt firmer and a strong retail order period for the New York Metropolitan Transportation Authority signaled the institutional order period would see demand. “The market is trading up one to two basis points,” a Boston trader said. “It looks like the MTA deal is going to be a blow-out.”

In the primary market, Wells Fargo Securities priced for retail $958.2 million of MTA dedicated tax fund refunding bonds, rated AA by Standard & Poor’s and AA-minus by Fitch Ratings. Institutional pricing is expected Tuesday.

Yields on the first series, $895.2 million of current interest bonds, ranged from 0.43% with a 4% coupon in 2014 to 3.07% with a 4% coupon and 2.87% with a 5% coupon in a split 2031 maturity. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.

Bonds in the second series, $63 million of capital appreciation bonds, had a yield to maturity of 3.62% in 2032.

Bank of America Merrill Lynch priced for retail $217.6 million of Nebraska Public Power District general revenue bonds, rated A1 by Moody’s Investors Service, A by Standard & Poor’s, and A-plus by Fitch. Institutional pricing is expected Tuesday.

Yields on the first series, $114.6 million of general revenue bonds, ranged from 0.36% with a 3% coupon in 2014 to 3.75% priced at par in 2043. The bonds are callable at par in 2023.

The second series, $103 million of general revenue bonds, were not offered for retail.

B of A Merrill also priced $136.7 million of Mississippi general obligation bonds, rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch. Institutional pricing is expected Tuesday.

Yields ranged from 1.22% with a 3% coupon in 2019 to 3.22% with a 3.125% coupon in 2032. Credits maturing between 2024 and 2026 and between 2028 and 2031 were not offered for retail. The bonds are callable at par in 2022.

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

Yields on Pennsylvania’s Mt. Lebanon Hospital Authority 5s of 2031 dropped four basis points to 3.43% while Ohio’s Buckeye Tobacco Settlement Financing Authority 6s of 2042 fell two basis points to 7.20%.

Yields on University of Texas 5s of 2043 and League City, Texas, 5s of 2020 fell two basis points each to 2.86% and 1.54%, respectively.

Still, other trades showed weakening. Yields on New York’s Liberty Development Corp. 5.25s of 2035 jumped three basis points to 4.06% while New Jersey Educational Facilities Authority 5s of 2033 increased one basis point to 1.35%.

On Monday, the two-year Municipal Market Data yield finished flat at 0.30% for the 14th consecutive trading session while the 10-year yield closed steady at 1.69% for the second session. The two-year yield fell two basis points to 2.82%.

The 10-year yield now trades nine basis points above its record low yield of 1.60% set July 26 while the 30-year yield hovers only three basis points above its 2.79% record low set July 25.

The Treasury yield curve steepened as yields on the short end fell while yields on the long end rose. The two-year yield fell one basis point to 0.26% while the 30-year yield increased one basis point to 2.85%. The benchmark 10-year was steady at 1.67%.

While there has been a lot of discussion surrounding the fiscal cliff and the uncertainty of the presidential elections, reaction in the municipal bond market has been fairly muted up to this point. But analysts at Piper Jaffray said the taxable municipal market is starting to show signs of uncertainty.

“The taxable municipal market is starting to feel the impact of potential sequestration,” wrote Patrick Tucci, taxable analyst at Piper Jaffray. “It has taken the better part of two weeks, but there is starting to be some clarity. Most accounts are shying away from Build America Bonds within 12 years.”

He added buyers continue to look at taxable munis — and haven’t shied away from the market completely — but BABs are out of the picture for now. “Instead of looking at this as an opportunity, they would rather not contend with the headline risks,” Tucci noted.

“As a result, the market is seeing street BAB inventory languish or get passed around the dealer community at wider spreads versus non-BAB taxable munis,” he said, adding there is about a 10- to 15-basis-point spread between BABs and other taxable munis of similar maturity and rating.

Tax-exempt analysts note that many tax-exempt munis are trading in similar fashion. “A lot of the same names continue to be shuffled from dealer to dealer in the secondary,” wrote Mark Cantrell, managing direction. “Europe, the fiscal cliff, and a looming election should keep volatility in the market. None of these factors are going away, so the market will remain ready to react at any moment.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.