The tax-exempt market felt like a ghost town Monday morning as traders said the market was quiet.
Most municipal bond traders in the tri-state region stayed home to prepare for Hurricane Sandy. Traders who live further west said offices were quiet and they planned to go home by noon.
The Securities Industry and Financial Markets Association recommended fixed-income markets close at noon. The equity markets are closed Monday.
"There is nothing at all to report," a Chicago trader said. "And it will be worse tomorrow." As of Monday morning, only New Jersey had formally announced plans to postpone the sale of its $2.6 billion in tax and revenue anticipation notes, but traders said it was highly likely other issuers would announce postponements shortly.
"My guess is they are definitely canceling and pushing deals back to next week," the Chicago trader said. "But then it's election week. So that could put a hold on it. It depends on how this whole thing blows through."
On Friday, the Municipal Market Data scale ended stronger. The benchmark 10-year muni yield and the 30-year yield fell two basis points each to 1.73% and 2.83%, respectively. The two-year remained at 0.30% for the 23rd straight trading session.
Treasuries rallied Monday morning. The benchmark 10-year yield and the 30-year fell five basis points each to 1.71% and 2.87%, respectively. The two-year yield fell two basis points to 0.29%.
In economic news, personal income grew $48.1 billion, or 0.4%, in September while spending increased $87.9 billion, or 0.8%.
Personal income came in right at economist expectations of 0.4% while consumption topped the 0.6% expected.
"Consumer spending through the third quarter grew rapidly but about half of the gain was absorbed in high inflation as PCE price inflation at 3.4% kept pace with real spending gains at 3.5%," wrote economists at RDQ Economics. "The result of the rapid inflation is squeezed real disposable incomes, which fell 0.8% at an annual rate since June, and a fall in the savings rate to 3.3% in September from 4.4% in June."
The economists added, "It is essential, in our judgment, that the tax hikes in the fiscal cliff are postponed if consumer spending is to grow in the early part of next year."