NEW YORK – Tax-exempt customers are finalizing last-minute shopping plans as buyers are looking to put money to work. The holiday rush has set in as traders expect the market to dry up later this week when most market participants break for vacation.
“There are buyers,” said a trader in New York. “There is a lot of cash to be put to work and we are busy.”
Munis were flat across the curve early Tuesday, according to the Municipal Market Data scale.
On Monday, the 10-year muni yield fell one basis point to 1.92%, a record low, as recorded by MMD. The 30-year muni yield fell one basis point to 3.61%. The two-year yield closed flat at 0.36% for its ninth consecutive trading session.
Treasuries sold off overnight with yields rising across the curve. The two-year yield increased three basis points to 0.27%. The benchmark 10-year yield and the 30-year yield jumped seven basis points each to 1.88% and 2.86%, respectively.
In the primary market Tuesday, the competitive calendar is expected to run the show. Massachusetts is expected to auction $400 million of general obligation bonds, and Suffolk County, N.Y., brings to market $300 million of tax anticipation notes.
In the negotiated market, three of the week’s four biggest deals are expected to price.
Barclays Capital is expected to price $67.1 million of Oklahoma’s Beaver County Hospital Authority revenue bonds. The credit is rated A1 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and A-plus by Fitch Ratings.
Stifel, Nicolaus is expected to price $32.7 million of Ohio’s Ashtabula Area City School District general obligation refunding bonds. The credit is rated Aa2 by Moody’s.
RBC Capital Markets is expected to price $25.3 million of California’s Brentwood Infrastructure Financing Authority capital improvement revenue refunding bonds. The credit is rated AA-minus by Standard & Poor’s.
In economic news, housing starts jumped 9.3% in November, their highest level since spring 2010, to 685,000 from 627,000 in October.
“The early returns on the housing market for November continue to paint a picture of an improving trend in residential construction albeit from very low levels,” wrote analysts at RDQ Economics. “The recovery in housing construction has been in large part driven by multi-family housing, which likely reflects increased demand for smaller rental units as mortgage difficulties drive more households into renting. At this point, it looks like housing construction will add to fourth-quarter GDP growth.”
