Market participants will have less cash available to invest in July issuances, investors said.
They said many investors have already used the money from July 1 coupon payments to invest in June issuances, since volume was high in June. Many investors fear that volume will weaken in the oncoming months.
"I think a decent amount of [cash from July 1 coupon payments] has been accounted for because investors got such advanced warnings about supply potentially dropping off," a trader in New York said. "It's not like low supply sprung on us."
Issuance for June totaled $34 billion, according to data from The Bond Buyer and Ipreo. This is the first month in 2014 that volume came in higher than the same month in 2013's levels. Issuance in June 2013 totaled $26.07 billion.
"I wonder if a lot of that was spent in the middle of June, I wonder if that kind of aided the recent rally into lower rates," a trader in the northwest said. "I wonder if now were into July is already spent."
John Dillon, managing director at Morgan Stanley, said he does expect supply to "dip when we get into the heart of summer," keeping with seasonal patterns.
The largest deal for next week will come from the competitive market for $300 million of Massachusetts School Building Authority anticipation notes.
Other large competitive deals will come from the state of Wisconsin for $254.8 million of GOs and from the Florida Department of Transportation for 240 million dollars of revenue bonds.
The largest deal in the negotiated market for next week will come from the Indiana Finance Authority for $250 million of private activity bonds.
Other large negotiated deals for next week include $238 million of Louisiana gasoline and fuel tax revenue refunding bonds and $157.1 million of Massachusetts Port Authority revenue refunding bonds
