Investors, waiting for the coming calendar and armed with cash were expected to light up the secondary market with activity this week.
But instead, crickets. Traders report that all has been quiet on the buying front.
Redemptions, maturing bonds, and both current and advanced refundings are expected to total $27 billion for the month of December. Investors also face healthy inflows to muni bond mutual funds. Collectively, it should be a pro-bond environment, a trader in Chicago said.
"There still are solid inflows, and we have all this money coming due," he said. "The expectation with a lot of participants is that we'd see a lot of follow-through in the secondary. And we just haven't seen it."
There are a lot of customer bid-wanteds, he added. But from the demand perspective, there's little activity compared with that seen over the past couple of weeks.
"People aren't buying bonds in the secondary for the middle-market and retail-type customers," he said. "It's a little befuddling."
This week, an estimated $8.36 billion of new volume is expected to arrive, paced by two New Jersey Transportation Trust Fund Authority deals that total more than $1.2 billion. Last week, a revised $6.75 billion reached the market, according to Thomson Reuters.
Retail investors are gearing up for one of the week's larger issues Monday as Wells Fargo Securities is expected to price for them $829.2 million of Texas Transportation Commission highway improvement general obligation bonds. The bank will hold pricing for institutions on Tuesday.
By midday, tax-exempt yields have climbed slightly, according to a market read. Triple-A tax-exempt yields beyond six years on the curve are flat to one basis point higher.
Muni yields closed last week unchanged, following almost a week-long rally. The 10-year yield held at 1.47%, its record low set Wednesday, for a third consecutive trading session, according to the Municipal Market Data scale read.
The 30-year yield also finished steady at 2.47%, its record low, for the third straight day. The two-year closed at 0.30% for the 45th consecutive trading session.
The Treasury yield curve opened the week slightly weaker across the intermediate and long ends of the curve through midday. The benchmark 10-year yield has climbed two basis points to 1.64%.
The two-year yield has flattened at 0.26%, and the 30-year yield has ticked up one basis point to 2.82%, after jumping four basis points this morning.