NEW YORK – Early activity has subsided as tax-exempt trading slowed down by Tuesday afternoon.
“Activity has slowed down since this morning,” said a trader in New York. “With equities up big, it has taken the focus off munis.”
And indeed, munis were weakening in afternoon trading, according to the Municipal Market Data scale. Yields inside the six-year were steady while the seven-year yield rose two basis points. Outside the eight-year, yields increased one basis point.
On Friday, the 10-year muni yield fell three basis points to 1.83%, to set a record low as recorded by MMD. Friday’s record broke the previous record of 1.86% set Thursday, which broke the record of 1.87% set Wednesday. The prior record, 1.91%, was set the week before Christmas.
The 30-year tax-exempt yield closed down one basis point at 3.55%. The two-year yield held steady at 0.36% for its 17th consecutive trading session.
After firming last week, Treasuries were weakening in the first trading day of 2012. The two-year yield increased one basis point to 0.26%. The benchmark 10-year yield rose five basis points in afternoon trading to 1.93% and the 30-year yield jumped eight basis points to 2.97%.
In the primary market this week, the municipal market can expect $543 million in new issuance, down from last week’s revised $3.95 billion. Roughly $323.3 million in negotiated deals are expected, down from last week’s revised $3.6 billion, which includes the Michigan unemployment fund deal, which sold unexpectedly. In the competitive market, about $219.7 million is expected, down from last week’s revised $305.4 million.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed continued firming after strengthening the last week.
A dealer sold to a customer New Jersey Transportation Trust Fund Authority 5.25s of 2036 at 4.23%, 10 basis points lower than where they traded last week.
A dealer bought from a customer Golden State Tobacco Securitization Corp. 4.5s of 2027 at 6.30%, five basis points lower than where they traded two weeks ago.
Bonds from an interdealer trade of Colorado Health Facilities Authority 5.25s of 2025 yielded 5.42%, three basis points lower than where they traded two weeks ago.
In economic news, the Federal Open Market Committee will issue the minutes of its latest meeting at 2 pm, Eastern time.
