A slow municipal market greeted eager traders and investors, fresh from the holiday week.
Modest activity marked a trading session that so far has featured no large deals for institutional investors, as well as some tightening of deals in the secondary.
"Most of what we've seen has been retail picking away at some of the longer bonds out there, especially the New York [State] Thruway [Authority]," said a trader in Florida. "The expectations here … some of the offerings that were tucked away are probably a little more motivated to sell than prior to the holiday week. They're probably more firmly priced at this point. And we're starting to see some customer interest in those prices. A lot of the giveaways we saw prior to the vacation have evaporated and buyers are taking note."
Tax-exempt yields have firmed across all but the front end of the curve, according to the Municipal Market Data scale read. They were steady through two years.
Yields from three to 10 years are flat to two basis points lower. Beyond 10 years, they have dropped one to three basis points.
The benchmark 10-year triple-A and 30-year yields closed out last week down four basis points each to 1.82% and 3.12%, respectively. The two-year on Friday held at 0.32% for the 25th straight session.
Treasury yields continue to creep downward on the day. The benchmark 10-year yield has fallen four basis points to 1.51%. The 30-year yield has also dropped four basis points to 2.62%. The two-year slipped one basis point to 0.27%.
"Tomorrow will be the true test for the marketplace," the trader from Florida said, "to see how much follow-through we do get when we get everybody out of their post-holiday meetings and see where the real buy interest is, especially with the heavy cash sitting in customers' accounts after the July redemption period."
Muni supply should approach pre-holiday levels this week, after posting particularly weak issuance numbers last week.
Industry estimates anticipate $7.07 billion should reach the market. That compares with a meager $105.7 million of new supply during the holiday week.
Most of the heavy deals are expected to arrive on Tuesday. The retail order period on $317 million of Central Puget Sound Regional Transit Authority, in Wash., is expected Monday, MMD reports.
