NEW YORK – Munis are firmer Friday afternoon as traders look to buy a few more deals before next week’s Thanksgiving holiday shuts down the market.
“It’s a modestly firmer market,” said a trader in North Carolina. “Even Treasuries are off and it’s the end of the week and a lot of the primary is out of the way. The market has firmed back up from having a concession earlier in the week to bring in new deals.”
There is “continued buying” said a trader in New York, adding he is seeing yields fall between three and five basis points across the curve.
The Municipal Market Data scale had not been updated as of Friday afternoon. But munis were slightly firmer in morning trading.
On Thursday, munis rallied and yields closed down across the curve. The 10-year closed at 2.29% while the 30-year finished at 3.79%. The two-year was flat at 0.42% for the twelfth consecutive trading session.
Treasuries were mostly steady in early Friday afternoon trading. The two-year and 30-year were flat at 0.28% and 2.99%. The benchmark 10-year yield was up one basis point from morning trading, and up three basis points from Thursday, to 2.00%.
In the primary market, RBC Capital Markets is pricing for retail $295 million of California Public Works Board lease revenue bonds. The bonds are rated Aa2 by Moody’s Investors Service, AA-minus by Standard & Poor’s and AA by Fitch Ratings. Pricing was not available by press time.
Loop Capital Markets is also pricing for retail $200 million of University of Connecticut general obligation bonds. The credit is rated Aa2 by Moody’s, AA by Standard & Poor’s and AA-minus by Fitch. Pricing was not available by press time.
In a weekly MMD survey, 82% of surveyed traders said they remain neutral on the market for the short term, versus last week’s 78%. More traders are bullish as well, with 9% reporting positive views on the short term, up from zero last week. And those who said they are bearish on the market were down to 9% from 22%.
“The negative sentiment was due in large part to the expectation that the burgeoning supply calendar would trip up the market,” wrote MMD analyst Jeanine O’Connor. “But these concerns were strongly counterbalanced by the impressive fiscal catastrophe in the Euro Zone – a gift that keeps giving and giving to the U.S. fixed-income markets.”
She added that while yields backed up earlier in the week, the consensus maintains the market held up fairly well with the influx of new supply. “That, along with the plunge in new issuance for the Thanksgiving week, set the stage for an overall improved outlook for the tax-exempt sector.”
