NEW YORK — The municipal market has started the week by pausing to digest last week’s dramatic rallying.
Some bonds moved on the back end of the curve this morning that suggests a little bit of weakness, a trader in Florida said. However, there’s also been some swapping that’s occurred that could be masking some of those moves, he added.
Mostly, though, bid lists are manageable, and participants are looking to square their positions and consider the next move, he said.
“There are some dealers who’ve picked up some bonds who wouldn’t mind lightening up in here just to see where the market’s next move is going to be,” he said, “whether it’s a stabilization or a sideways grind, or if we’re going to continue to move to lower rates.”
Tax-exempt yields have started the week steady out to two years and beyond 22 years, according to the Municipal Market Data scale. Yields between three and 21 years are flat to one basis point higher.
The 10-year muni yield held at 1.97%. For the week, it dropped 16 basis points. The 30-year yield also held at 3.44% on the day. It plunged 26 basis points on the week. The two-year yield remained at 0.32% for a seventh straight session.
Treasury yields have picked up where they left off last week: they continue to weaken across the curve. To put the rate increases into perspective, though, they follow some incredible rallying at the intermediate and longer parts of the curve the past couple of sessions last week.
The benchmark 10-year Treasury yield, has risen four basis points on the morning to a still-incredible 1.87%.
The 30-year yield, which at one point plunged 53 basis points last week, has climbed three basis points to 2.93%. The two-year yield has inched up one basis point to 0.23%.
The market expects a slight decrease in new supply for this week, after a substantial increase in issuance last week. This week, the market expects an estimated $6.83 billion in new supply. Last week saw a revised $7.86 billion of volume.
Expected in the negotiated market this week is Citi’s pricing of $1 billion Port Authority of New York and New Jersey consolidated bonds. They are expected to come to market Tuesday.
Siebert Brandford Shank & Co. priced for retail Friday $752.4 million of New York City general obligation bonds in three series. A second day of the retail order period is expected Monday, followed by an institutional period Tuesday.
JPMorgan is expected to price $422.2 million of Denver city and county airport system revenue bonds. The bonds will be priced in three series.
In the competitive market, Minnesota is expected to price a total of $922 million of GOs in five issues Tuesday. The first pricing should involve $4 million, followed by $320 million, $445 million, $108 million, and $45 million.
In economic news, the Commerce Department reported Monday that new home sales fell to a 295,000 seasonally adjusted annual rate in August. That’s down 2.3% from July. New home sales have now fallen for four consecutive months.
Sales for July were revised up to 302,000 on an annual basis. June sales were revised to a rate of 303,000.
New home sales rose in the Midwest, but slumped in the Northeast, South, and West.
Sales matched predictions of economists polled by Thomson Reuters.
