NEW YORK – After seeing some activity Wednesday morning, the tax-exempt market is starting to slow.
“With the holiday season on the mind, it is tough to get customers to focus,” said a trader in New York. “The market does feel firm to unchanged with January money looming.”
The Municipal Market Data scale had yet to be updated by press time, but munis were mostly steady in morning trading.
Indeed, the market is showing signs of slowing after decent activity Wednesday morning. “Holiday apathy has already surfaced and it’s only Wednesday,” said MMD’s Randy Smolik. “Trades were getting fewer. It still takes a little concession to move some paper but it does feel like a fair amount of players were inclined to sit with position into the New Year.”
On Tuesday, the two-year yield closed flat at 0.36% for its tenth consecutive trading session. The 10-year muni yield closed flat at 1.92%, a record low as recorded by MMD, which was set Monday. The 30-year muni yield increased one basis point to 3.62%.
Treasuries continued the sell-off that began Tuesday, erasing all gains made over the previous week. The two-year yield and the benchmark 10-year yield rose two basis points each to 0.28% and 1.95%, respectively. The 30-year yield jumped five basis points to 2.98%. This week, the 10-year yield has jumped 14 basis points while the 30-year yield has spiked 19 basis points.
In the primary market Wednesday, Rice Financial priced $90 million of Jackson, Miss., Redevelopment Authority urban renewal revenue bonds. Details were not available by press time.
In the competitive market, Bank of America Merrill Lynch won the bid for $30 million of Suffolk County, N.Y., tax anticipation notes, originally slated for $100 million. The notes are rated M1G-1 by Moody’s Investors Service and F1-plus by Fitch Ratings. The notes yielded 1.09% with a 2% coupon in 2012.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board were mixed munis were firming and weakening by mid-morning.
A dealer sold to a customer California 5.5s of 2040 at 4.46%, 14 basis points higher than where they traded Monday. Another dealer sold to a customer Florida State Board of Education 5s of 2031 at 3.63%, two basis points higher than where they traded Monday.
A dealer bought from a customer New York Liberty Development Corp. 5s of 2041 at 4.29%, two basis points higher than where they traded Monday.
But other trades showed firming. Bonds from an interdealer trade of Puerto Rico Sales Tax Financing Corp. 5s of 2046 yielded 4.69%, 10 basis points lower than where they traded Monday.
A dealer bought from a customer New York City Municipal Water Finance Authority 5s of 2034 at 3.91%, five basis points lower than where they traded Tuesday.
Bonds from an interdealer trade of Detroit Water Supply 5s of 2036 yielded 5.11%, one basis point lower than where they traded Tuesday.
