Trading in the tax-exempt market remained fairly quiet Monday afternoon as traders said volume was low and there wasn’t enough activity to move the market either way.
“It hasn’t been super active,” a San Francisco trader said. “We are getting the dust off from the long weekend. We are seeing a few bumps out there but we are also getting color from the street that said some things look softer. Some desks are bringing in stuff easier than they expected. But it’s quiet.”
Overall, the trader said the market is in a waiting period until the primary hits later in the week. “I think there will be decent appetite but that remains to be seen.”
He added he focuses more on the secondary to find higher coupons and has been participating less in the primary. “We don’t like the primary because it’s not a structure we like. We like higher coupons and it’s a needle in a haystack and takes effort and sometimes we are buying smaller pieces than we’d like but we are looking for the higher coupons in the secondary.”
In the primary market later this week, municipals can expect $7.92 billion to be issued, up from last week’s revised $2.29 billion. On the negotiated calendar, $5.82 billion is expected to be priced, up from last week’s revised $2.01 billion. In competitive deals, $2.10 billion should be auctioned, up from last week’s revised $276.4 million.
Last week, the Thanksgiving holiday-shortened week ended steady to slightly weaker. On Friday, the 10-year Municipal Market Data yield held steady at 1.53%, hovering above the record low of 1.50% set Nov 16.
The 30-year MMD yield remained unchanged for the fifth session at its record low of 2.54% set Nov. 16. The two-year finished steady at 0.30% for the 40th consecutive trading session.
Yields have fallen dramatically since the beginning of the month. Over the course of November, the 10-year MMD yield has fallen 19 basis points from where it started at 1.72% while the 30-year yield has fallen 28 basis points from where it started the month at 2.82%.
Treasuries continued to post gains Monday afternoon. The benchmark 10-year yield fell three basis points to 1.66% while the 30-year yield plummeted four basis points to 2.79%. The two-year yield fell one basis point to 0.27%.
Most expected last week’s Thanksgiving holiday-shortened trading week to be slow and with yields at record lows, trading volume was almost certain to be subdued. But retail-sized trades from BondDesk Group show trading volume was up during the Thanksgiving week compared to previous weeks.
For the week ending Nov. 21, there were 59,707 buy trades, the highest in five weeks and much more than the 48,736 buy trades for the week ending Nov. 14, BondDesk Group said. There were also much more sell trades for week ending Nov. 21, with 32,167. That figure was higher than the previous five week’s sell trades and much higher than the 28,649 sell trades for the week ending Nov. 14. Overall, the ratio of buys to sells was 1.9 for the week ending Nov. 21, more than the ratio of 1.7 for the previous week but less than the 2.0 ratio for the week ending Nov. 7.
The dollar volume of trades was also up, with $1.69 billion in par amount of buy trades, and $948 million of sell trades. Dollar volume for the week was higher than the previous five weeks and much higher than the $1.3 billion in buys and $845 million in sells for the week ending Nov. 14.