Municipal bonds were steady across the curve Friday as trading slowed with no big deals on the calendar.
Muni yields were unchanged even as Treasuries softened, with 30-year and 10-year Treasury yields slipping one basis point each to 3.53% and 2.69, respectively. Two-year notes also slipped by one basis point to 0.46%.
Munis continue to outperform Treasuries as signs of a rebounding economy, including a 2.2% gain in durable goods orders for February reported on Wednesday, have left the municipal market relatively unaffected. The muni market recovered from a five-day sell-off on interest rate concerns at midweek. As the week ends yields on two-year maturities have risen one basis point to 0.41% from March 21 while five-years yields climbed up 3 basis points to 1.31%. Ten-year yields fell 3 basis points to 2.52%, while 30-years declined 10 basis points to 3.93%.
Prices for long-term bonds rose more than short or intermediate bonds Wednesday and Thursday. By market close Thursday 15- to 30-years yields had dropped 10 basis points, over the two days, while they fell four basis points for five- to seven-year maturities and seven basis points eight- to 13-years out.
The total potential volume scheduled for next week's new issuance calendar is $4.19 billion, down from this week's $4.78 billion issuance.
This week's calendar was led by Atlanta's three-part $852.8 million deal priced on Tuesday, $147.2 million more than originally scheduled, followed by California's issuance of $794.4 million on Thursday.
Issuance increased for this week from the originally projected $3.85 million of issuance due to investors' large appetites for supply during retail order periods.
"There's been a lot of money across the board with buyers and not enough supply," a North Carolina trader said. "Every week there are three or four mega deals that make the week seem large. We need $8 to $10 billion more supply a week. Investors are not being fully allotted. There are always the same names in the market; it's difficult to get excited about new issuance."
