The municipal market continued to tread water Monday after a 13th straight week of outflows from municipal bond funds kept wary investors waiting for upcoming issuance. Traders on vacation the week before Labor Day also added to the late-summer doldrums.
"There's very little activity," said one trader in New York. "There are still concerns over where we're headed. Outflows just add to it - if you're on the fence, you hold tight and see where it goes. This morning is back to school and back to reality."
Activity was slow as traders wait for new issue volume to hit the market later this week, the trader said.
"It's a combination of feeding into the holiday weekend as well as waiting for more activity tomorrow and Wednesday, with long-end California and short-end Texas issues," the person said. "There's certainly a full plate."
California will bring $764 million of competitive general obligation bonds on Tuesday. The deal is structured with $560 million of GO refunding bonds maturing from 2014 to 2024, in 2028, and from 2030 to 2033, as well as $205 million of new-money debt maturing in 2022, from 2024 to 2027, and in 2029. Proceeds will finance a variety of infrastructure projects.
Yields on the triple-A Municipal Market Data were steady from 2014 out to 2035 as of approaching midday. Beyond 2035, yields ranged from steady to as much as one basis point lower.
Treasuries saw gains Monday morning, with the benchmark 10-year yield sliding two basis points to 2.80% and the 30-year yield falling two basis points to 3.79%. The two-year yield remained steady at 0.38%.