Traders described the tax-exempt market as apathetic in Monday's afternoon trading session as buyers were hesitant to put money to work ahead of Wednesday's Federal Open Market Committee meeting announcement, GDP numbers, and more expected outflows from muni bond funds.
"It does not feel stronger. It feels flat or maybe weaker," a New Jersey trader said. "All of the big funds have a ton of cash and they are keeping it that way. They don't want to put money to work."
This trader added the month-end statements are coming out again for the retail customer and returns will be negative, probably prompting more outflows. "Cash is king and funds don't want to spend it if there are more redemptions."
There is some buying, this trader said. But it is very selective and in shorter maturing bonds.
In the primary market Monday, Citi released a pre-marketing wire on the largest deal of the week, $1.1 billion of Ohio Turnpike Commission bonds. Pricing is expected Tuesday.
Barclays released a pre-marketing wire for $206.9 million of Georgia Private Colleges and Universities Authority revenue bonds for Emory University. The bonds are rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch. The bonds are expected to price Tuesday.
Yields ranged from 10 basis points to 30 basis points above the Municipal Market Data scale on bonds maturing between 2015 and 2022. Bonds maturing in 2043 yielded 50 basis points above the MMD scale. The bonds are callable at par in 2023.
Barclays released a pre-marketing wire for $125.1 million of Orange County Transportation Authority senior lien toll road revenue refunding bonds, rated A1 by Moody's, A by Standard & Poor's, and A-minus by Fitch. The deal is expected to price Tuesday.
Yields ranged from 35 basis points to 90 basis points above the MMD scale on bonds maturing in 2015 and 2030. The bonds are callable at par in 2023.
Friday, yields on the Municipal Market Data scale ended as much as 10 basis points lower. The 10-year yield slipped seven basis points to 2.70% and the 30-year yield fell 10 basis points to 4.21%. The two-year finished flat at 0.43% for the eighth consecutive session.
Yields on the Municipal Market Advisors scale also ended as much as 10 basis points lower. The 10-year yield fell seven basis points to 2.89% and the 30-year yield dropped 10 basis points to 4.29%. The two-year was steady at 0.54% for the third session.
Treasuries continued to weaken Monday afternoon. The benchmark 10-year yield increased four basis points to 2.60% and the 30-year yield rose six basis points to 3.67%. The two-year was steady at 0.33%.