Trading activity in the municipal marketplace spiked Monday afternoon as rallying Treasuries and new retail bonds brought investors off the sidelines.
Municipal bond trading measured by the MSRB was up as much as 30% above Bloomberg's Monday average in the afternoon, as investors focused on New York, California and Texas bonds. Puerto Rico bond trading was the only top-12 most actively traded bond that saw a decline in activity today, according to data from Bloomberg.
Yields on all bonds strengthened through the afternoon. Bonds maturing between three and seven years out saw a bigger jump in activity than any other maturity range.
"The yield curve is coming in a bit," one Chicago-based trader said in an interview. "There's just a ton of cash on the sidelines and there's been no supply."
In the negotiated market, New York City began pricing for $700 million of general obligation bonds with a retail order period on $650 million of it.
Yields on the GOs ranged from 0.59% with a 3% coupon in 2017 to 4.3% with a 4.25% coupon in 2039. Bonds maturing from 2024 to 2033, as well as those in 2013 and from 2035 to 2038, were not offered for retail.
Bond prices were also aided by a rallying Treasury market Monday that strengthened amid growing tension between Ukraine and Russia. Treasuries gained last week as the Department of Labor reported jobs numbers that indicated a sluggish economy.
"The economic numbers have not been great, and it's not just the weather, it seems to be more of a trend," the trader said. "Then with this tension with Russian, it always opens people's eyes up to what's going on in the world."
Treasuries strengthened Monday morning, with the 10-year benchmark yield down six basis points to 2.61%, while 30-year yield fell to 3.56%. The two-year yield slid one basis point to 0.32%.
There are $3.90 million of negotiated bonds slated for this week, and $1.37 billion in competitive deals, according to data from Ipreo and The Bond Buyer. Last week's total bond sales came to just $2.49 billion.
Yields on bonds maturing beyond 2033 declined as much as six basis points, according to Municipal Market Data. Bonds on the shorter end of the curve strengthened by one to three basis points, while those with maturities between 2019 and 2032 firmed by as much as five basis points.
