NEW YORK — The secondary market is showing some activity in the belly of the curve Tuesday morning.
Tax exempts in the 10-year range, and in, have seen interest, as yields there have eased a bit, a trader in New York said. Still, trading on the day is light, roughly half of what the secondary market has seen, on average, over the past 30 days, the trader added.
“It seems that sentiment in the secondary is growing a bit,” he said. “Offers aren’t just getting lifted and what not, but I’m seeing the interest is out there.”
Traders also expect another active day in the primary market, as several large deals are expected to arrive. But there were some price concessions on Monday’s deals, the trader added.
“The rumblings I’ve heard are that people are a little timid right now,” he said. “They need a larger buyer to come in and lead the way before others do.”
Munis are steady across the front end of the curve, according to Municipal Market Data scale. Debt maturing between 2017 and 2022 is flat to one basis point higher. Tax exempts maturing from 2023 and 2041 are unchanged.
The benchmark 10-year muni yield ended Monday flat at 2.66% for the fifth straight day, 32 basis points beneath its average for 2011.
The two-year yield also held a 0.40% yield for a fifth consecutive day, its low for 2011.
The 30-year yield remained at 4.32% for a second straight session, 30 basis points under its average for the year.
Treasury yields opened the day mixed. The 10-year yield rose one basis point to 2.93%.
The two-year yield also inched up one basis point to 0.38%. The 30-year yield, though, fell two basis points to 4.29%.
New issues are expected to total $8.27 billion this week, against a revised $5.71 billion last week. It is expected to be the largest volume for new debt offerings seen this year in the primary market.
This morning, Piper Jaffray priced $259.4 million of Houston Convention Center and Entertainment Facilities Department hotel occupancy tax and special revenue refunding bonds in two series. The bonds are rated A2 by Moody’s Investors Service and A-minus by Standard & Poor’s.
Yields for the first series, $119.2 million, range from 1.15% with a 5.00% coupon in 2013 to 5.30% with a 5.125% coupon in 2033. Debt maturing in 2012 was offered in a sealed bid.
Yields for the second series, $140.2 million, range from 1.15% with a 5.00% coupon in 2013 to 5.43% with a 5.25% coupon in 2033. Credits maturing in 2012 were offered in a sealed bid.
In economic news on the morning, building permits were issued at a seasonally adjusted annual rate of 624,000 units in June, according to a joint release by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This represents a 2.5% increase from the revised May rate of 609,000. It’s also 6.7% above the June 2010 estimate of 585,000.
Privately owned housing starts in June were at a seasonally adjusted annual rate of 629,000. This marks a 14.6% increase from the revised May estimate of 549,000, and is 16.7% above the June 2010 rate of 539,000.
