Investment grade tax-exempt bonds showed small improvements Wednesday morning, following a firmer Treasury market, though high-yield bonds continued to drop in price.
Many of the week's largest deals priced Tuesday and more large deals should come to market Thursday, allowing for some breathing room in this morning's trading session. But buyers, hesitant of putting cash to work in the secondary, are also staying out of the primary. "Deals are struggling," a Chicago trader said. "The general market feels a little better but high-yield doesn't."
Generally speaking, traders expressed frustration over the muni market in the last few weeks. "The market is up and down and everyone is afraid and no one is spending money," this trader said. "People are expecting outflows after the Puerto Rico news and potentially Fed tapering next week," he said, referring to the Federal Reserve meeting next Wednesday.
Later Wednesday in the primary market, Wells Fargo is expected to price for retail $210.7 million of West Virginia Hospital Finance Authority revenue refunding and improvement bonds for West Virginia United Health System. Institutional pricing is expected Thursday.
In the competitive market, Palm Beach County, Fla., School District is scheduled to auction $115 million short-term notes, rated MIG-1 by Moody's.
Tuesday, yields on the triple-A Municipal Market Data scale ended mostly unchanged. The 10-year and 30-year yields were steady at 2.99% and 4.48%, respectively. The two-year was steady at 0.43% for the 39th straight session.
Yields on the Municipal Market Advisors scale also ended mostly unchanged. The 10-year and 30-year yields were flat at 3.12% and 4.59%, respectively. The two-year closed unchanged at 0.55% for the 18th session.
Treasuries were slightly stronger Wednesday morning, reversing some of Tuesday's losses. The benchmark 10-year and 30-year yields fell two basis points each to 2.94% and 3.87%, respectively. The two-year yield slid two basis points to 0.46%.