Meandering Treasuries and light supply on the week have bumped muni yields modestly higher crossing noon.
Tax-exempt high-grade yields are fading up to three basis points higher, according to a market scale read. Traders report a lethargic, even queasy, market that is looking for direction amid few strong indicators.
The market struggles for price discovery most of the time, a trader in Texas said. When there are a lot of deals, even though it’s a heavy calendar, he added, there are a lot more chances for price discovery.
“So, when the new issue calendar is light, we tend to drift anyway,” he said. “And with Treasuries drifting, that could make for a tough week.”
Speaking of issuance, the market
This breaks down into $3.40 billion in negotiated deals expected, representing an increase from last week’s revised $3.18 billion. Also, $702.8 million should be auctioned on the competitive side of the ledger, up from last week’s revised $635.4 million.
Bank of America Merrill Lynch priced for retail the week’s largest deal: $849.2 million of the New Jersey Transportation Trust Fund Authority transportation program bonds. The bonds are rated A1 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings. Official pricing is expected to occur Tuesday.
Yields range from 0.70% with a 2.00% coupon in 2015 to 5.19% with a 5.00% coupon in 2044. Credits maturing in 2025, 2026, 2028, 2030 through 2033 and 2038 are not available for retail. The bonds are callable at par in 2023.
B of A Merrill should price $526.7 million of the New York State Dormitory Authority dormitory facilities revenue bonds Thursday, following a one-day retail order period.
Tax-exempt yields crossing noon are up to three basis points weaker beyond the front of the curve, according to the Municipal Market Data scale. They are unchanged through four years and weakest around six years.
On Friday, the 10-year triple-A yield rose three basis points to 2.88% and the 30-year yield increased two basis points to 4.39%. The two-year finished last week flat at 0.43% for the 23rd consecutive session.
Yields on the Municipal Market Advisors scale ended as much as three basis points higher. The 10-year yield rose two basis points to 3.02% and the 30-year yield climbed three basis points to 4.49%. The two-year was steady at 0.55% for the second session.
Treasuries continue to weaken beyond the front end of the curve heading into the afternoon. The benchmark
10-year and the 30-year yields have ticked up four basis points each to 2.88% and 3.90%, respectively. The two-year yield is holding at 0.36%.
