NEW YORK — A tight municipal market has been made all the more hesitant by a debt-ceiling deadline that’s moving ever closer. But firming Treasury yields in the early afternoon have provided the secondary market a miniscule boost.
Low yields and light issuance have also had an effect on the market, a trader in California said.
“It doesn’t feel like people are panicking or bids are suffering because of any kind of ceiling,” he said. “It’s a reason for accounts to wait until we know there’s a [resolution]. A lot of people are saying they’re not buying municipal bonds until the debt ceiling changes.”
Muni yields were steady across spots on the curve crossing midday Tuesday, according to the Municipal Market Data scale. Bonds maturing in 2014 and 2015 were flat to two basis points firmer. Maturities between 2022 and 2031 were flat to one basis point weaker.
The benchmark 10-year tax-exempt yield remained unchanged Monday at 2.68% for a third consecutive trading session. The two-year yield held once again at its low for the year, 0.40%, for a 10th straight session. The 30-year yield rose one basis point on the day to 4.35%.
Treasury yields were firmer across the curve heading into the afternoon. The 10-year yield dropped five basis points to 2.96%.
The 30-year yield fell three basis points to 4.29%. The two-year yield also decreased three basis points to 0.40%.
The market is watching the week’s primary issuance, with one eye toward the rapidly approaching debt-ceiling deadline. It anticipates about half the volume of new issuance it saw last week. About $4.1 billion in new deals is expected, after $8.3 billion came to market last week, the largest volume for new debt offerings in 2011.
In negotiated deals, Jefferies & Co. priced $282.8 million of Texas Public Finance Authority taxable general obligation and refunding bonds. The bonds were rated triple-A by Moody’s Investors Service and Fitch Ratings, and AA-plus by Standard & Poor’s.
Yields range from 0.716% with a 3.00% coupon in 2013 to 5.116% at par in 2031. Credits maturing in 2012 were not formally reoffered.
Bank of America Merrill Lynch priced $100.1 million of North Dakota Public Finance Authority state revolving fund program bonds. The bonds are rated Aaa by Moody’s.
Yields range from 0.49% with a 3.00% coupon in 2013 to 4.08% with coupons of 4.00% and 5.00% in a split maturity in 2031. Debt maturing in 2012 was offered in a sealed bid.
In economic news, the Conference Board’s consumer confidence index improved somewhat in July, after having declined in June. The index now stands at 59.5, up from 57.6 in June.
Consumers evidently have a more positive long-term outlook and a less favorable take on their current conditions, the Conference Board reported Tuesday. The present situation index decreased to 35.7 from 36.6. The expectations index rose to 75.4 from 71.6 last month.
