The municipal bond market on Friday was looking ahead to more than $7 billion coming to market in the week of Jan. 12.
Prices of top-quality municipal bonds were finishing stronger along with Treasuries, traders said, after Friday's release of the December employment report.
Primary Market
Traders are awaiting the $7.27 billion of new issue supply in the week ahead, with the calendar consisting of about $6.19 billion of negotiated deals and $1.08 billion of competitive transactions.
This compares with about $4 billion of new deals that came to market in the past week.
Traders said they expect the volume will be very well received.
"We have had very good retail support all week long and January is always a big month for the industry with all of the rollovers," said a New York trader.
Topping the negotiated slate is the New York City Transitional Finance Authority's $750 million building aid revenue bonds expected to be priced by Ramirez & Co. on Wednesday after a two-day retail order period.
Also on tap are a $561 million King Co., Wash., sewer revenue bond deal to be priced by J.P. Morgan Securities on Monday; a $502 million Illinois Finance Authority revenue bond sale for Chicago's Rush University Medical Center Obligation Group to be priced by Goldman, Sachs on Thursday and a $400 million sale from the N.Y. Metropolitan Transportation Authority to be priced by JPMorgan on Thursday.
The largest competitive sale is the Orange County Sanitation District, Calif.'s $131 million wastewater refunding obligations, going out for bid on Tuesday.
Secondary Market
Prices of top-quality municipal bonds were higher on Friday.
The yield on the benchmark 10-year general obligation fell three basis points to 1.88% from 1.91% on Thursday, while the yield on 30-year GOs was down four basis points to 2.67% from 2.71%, according to the final read of Municipal Market Data's triple-A scale.
On Jan. 9, 2014, the yield on the 10-year stood at 2.71% while the yield on the 30-year was at 4.10%, according to the MMD historicals; on June 9, 2014, the yield on the 10-year stood at 2.29% while the yield on the 30-year was at 3.36%.
On Friday, Treasury prices were higher, with the two-year note yield dropping to 0.58% from 0.61% on Thursday. The 10-year yield declined to 1.97% from 2.02%, while the 30-year yield decreased to 2.56% from 2.60%.
The 10-year muni to Treasury ratio was at 95.6% on Friday compared to 94.6% on Thursday, while the 30-year muni to Treasury ratio was at 104.6% versus 104.4%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,903 trades on Thursday on volume of $11.939 billion. Most active on Thursday, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 185 times with an average price of 102.542 and an average yield of 3.925%.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $1.338 billion of inflows in the week ended Jan. 7, after seeing outflows of $9.414 million in the previous week, according to the latest Lipper data.
The four-week moving average remained positive at $649.675 million in the latest week after remaining in the green at $489.142 million in the prior week. A moving average is an analytical tool used to smooth out price moves by filtering out fluctuations.
Long-term muni bond funds saw inflows of $821.434 million in the latest week, compared to outflows of $267.407 million in the previous week. High-yield muni funds recorded inflows of $336.200 million, after seeing outflows of $64.769 million in the prior week.
Exchange-traded funds had inflows of $158.198 million, after seeing inflows of $55.834 million in the previous week.
