NEW YORK — The municipal market has had an aggressive last couple of days on otherwise light volume.
Official muni yield reads got a little ahead of the market, traders said. They were looking more toward Treasuries and trying to keep up, they added. But traders foresee yields backing up Wednesday.
“Guys are way back [with their prices], so relative to the [Municipal Market Data] scale, people aren’t willing to sell bonds there,” a trader in California said. “There’s going to need to be some adjustments back today to meet prices, because everyone’s coming in a little low.”
Tax-exempt yields are mostly flat across the curve Wednesday, according to the Municipal Market Data scale. For maturities in 2021 through 2031, yields are flat to one basis point lower.
The benchmark 10-year yield Tuesday fell seven basis points to 2.10%, a record low on MMD. It has fallen 14 points since Sept. 1.
The 30-year yield plunged eight basis points on the day to 3.70%, its lowest level since Sept. 29.
The two-year yield remained unchanged at 0.30% for a 19th consecutive session, holding at its lowest level in more than 40 years.
Treasury yields, which started the week with a rally, are mostly flat at the opening. The 10-year benchmark yield rose one basis point to 1.99%, still incredibly low for the year.
The 30-year yield has also increased one basis point to 3.27%. The two-year yield, though, inched down a basis point to 0.20%.
Though the week is shortened by the Labor Day holiday, new-issuance volume is still expected to be higher that last week’s. Industry estimates place the total for the week at almost $3 billion, versus a rather slight $1.72 billion last week. Most of the biggest deals are expected to reach the market later in the week.
Citi Tuesday priced the only large deal of the day, $253.5 million of Fulton County, Ga., water and sewerage revenue refunding bonds. They were rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.
Yields ranged from 0.40% with a 5.00% coupon in 2013 to 3.76% with a 5.00% coupon in 2028.
“There are only a few deals this week,” the trader said. “Most of the supply is going to get taken care of today and tomorrow. The lack of supply, if for nothing else, should hold the municipal market up better if things do start to tail off on the Treasury side.”
Out of the gate, the equities markets saw gains in all three major exchanges. They were up by at least 1.63%, with the Dow Jones Industrial Average up almost 182 points.
