NEW YORK — The municipal market Wednesday in some aspects resembles itself at this point last week. There is a lot of new issuance set to arrive as Treasuries are selling off.
But this time, participants are hoping underwriters have learned from last week’s struggles to move product. Now, they have an opportunity to price the new deals with a better understanding of the market’s appetite, a trader in New York said.
“Everybody’s waiting to see where the new issues come in,” he said. “Guys are expecting underwriters to price these deals to go. People got pretty burned last week. Now, you’re going to see guys price these to keep stuff moving, to get them done.”
Tax-exempt yields have so far held off from following Treasuries on their steep ascent to weaker yields, preferring to just flatten at the long end. There was no read at press time from the Municipal Market Data scale. On Tuesday, yields on that scale were steady through 22 years, and one basis point higher in 2034. Beyond that, they pushed up two basis points.
The 10-year muni yield rested for a second consecutive session. It was steady on the day at 2.55%; it has surged 58 basis points since it sat at a record low on Sept. 23.
The two-year yield also held on the day at 0.43%. The 30-year yield rose two basis points to 3.73%.
Treasury yields continue to rise early Wednesday. The benchmark 10-year Treasury yield has risen seven basis points on the morning to 2.23%. In a little more than a week, it has soared 44 basis points.
The 30-year has increased nine basis points to 3.20%. The two-year yield ticked up a basis point to 0.32%.
“The market felt OK Friday and Tuesday,” the trader said. “It feels iffy this morning, with another downward day in Treasuries.”
The industry anticipates a drop in volume this week. Roughly $6.93 billion is expected, on the heels $8.23 billion last week.
On the negotiated side, JPMorgan priced $229 million of taxable Tennessee general obligation bonds. The bonds are rated Aaa by Moody’s Investors Service, AA-plus by Standard & Poor’s, and AAA by Fitch Ratings.
Yields range from a plus-25 basis point spread to Treasury with a 0.125% coupon in 2013 to a plus-100 basis point spread to Treasury with a 4.375% coupon in 2031. Credits maturing in 2012 were offered in a sealed bid.
Goldman, Sachs & Co. priced $191 million of Indiana Finance Authority state revolving fund program bonds. The bonds are rated triple-A by the major ratings agencies.
Yields range from 0.52% with a 4.00% coupon in 2013 to 3.96% with a 5.00% coupon in 2030. Debt maturing in 2012 was offered in a sealed bid.
This afternoon, the Federal Reserve will release the minutes of the September 20 Federal Open Market Committee meeting.
