A light new-issue calendar expected during this holiday-shortened week did little to calm the municipal bond market Tuesday morning as yields rose several basis points following a Treasury selloff.
The 10-year and 30-year Treasury yields jumped 14 basis points each to 2.89% and 3.82%, respectively. The two-year yield rose four basis points to 0.43%.
Municipal bond traders said munis followed, even though trading activity felt light. "Munis are following Treasuries in spite of how quiet it is," a New York trader said. "People are back at their desks today but it's hard to gauge the market."
This trader said the light calendar should allow most issuers to price deals Wednesday ahead of the Rosh Hashana holiday Thursday and Friday.
"I'm doing trades but it feels quiet," a second New York trader said. "It feels a few basis points weaker but there aren't enough trades going through."
This week, the new issue market can expect $1.59 billion, down from last week's revised $3.95 billion. In negotiated deals, $1.3 billion is expected, down from last week's revised $2.4 billion. On the competitive calendar, $290.5 million should be auctioned, down from a revised $1.56 billion priced last week.
Friday, yields on the triple-A Municipal Market Data scale ended mostly flat. The 10-year was steady at 2.94% for the third session and the 30-year was also unchanged for the third session at 4.45%. The two-year finished flat at 0.43% for the 33rd straight session.
Yields on the Municipal Market Advisors scale ended mostly flat across the curve Friday. The 10-year yield rose one basis point to 3.09% and the 30-year closed steady at 4.54% for the third session. The two-year closed unchanged at 0.55% for the 11th session.