NEW YORK — Municipal bonds are mostly holding strong levels across the yield curve and ignoring a weakening in Treasury yields Thursday morning.
As large competitive deals continue to make their way through the primary market, the secondary is seeing moderate activity, a trader in Florida said.
“The front half of the curve this morning seems to be in relatively decent shape, despite Treasuries,” he said. “We’re seeing decent activity and going-away business and some swapping taking place. But they appear to be at unchanged levels from yesterday.”
The back end of the curve is quiet, he added. The two-sided markets he’s seeing mostly involve a few traders bidding matching-type bonds. Levels are largely unchanged from yesterday.
“There were a couple of bid-wanteds with customers this morning in the high-grade sector; 10-yrs got fairly aggressive numbers,” he said, “no weakness at this point.”
Muni investors and dealers who have been watching the week’s primary market closely to gauge how it absorbs the new issuance have seen muni yields hold steady for the week. Most deals have been reasonably well-priced and have seen strong demand, particularly on the negotiated side traders say.
The new issuance for the week is expected to total $8.27 billion, against a revised $5.71 billion last week. It is shaping into the largest volume for new debt offerings so far this year.
Several large competitive deals out of California Thursday highlight the last real day of new issuance for the week, in particular from Los Angeles and the San Francisco Public Utilities Commission.
Munis started the day mixed, according to the Municipal Market Data scale. Maturities in 2014 are flat to two basis points firmer. Maturities in 2013, and from 2015 to 2019, are unchanged. And those from 2020 to 2041 are flat to one basis point higher.
The benchmark 10-year tax-exempt yield ended Wednesday flat on the day at 2.66% for the seventh straight day, at 32 basis points below its average for 2011.
The two-year yield also held at 0.40% for a seventh consecutive day, its low for the year. The 30-year yield remained at 4.32% for a fourth straight session, 30 basis points under its average for 2011.
Treasury yields weakened across the curve Thursday morning. The 10-year yield climbed three basis points to 2.97%.
The 30-year yield jumped five basis points to 4.31%, after rising eight basis points Wednesday. It has fully reversed its 13-basis-point drop late Tuesday afternoon.
The two-year yield stepped up two basis points to 0.40%.
