NEW YORK — The municipal market has hurtled from the gate with a confident stride Tuesday, outperforming Treasuries early as the bulk of the week’s new issuance filters in.
Activity in the secondary market has been brisk, a trader in New York said, with about $2.5 billion traded thus far.
“The market’s been pretty active; we’re seeing some good flow,” the trader said. “People came out swinging this morning. They have money, but the inventory is starting to go.”
Whereas muni yields started the week slightly firmer across all but the front of the curve, they are taking a bolder plunge Tuesday, according to the Municipal Market Data scale. There is no read yet for yields out to five years. But, thereafter, they have fallen two to seven basis points. They show their most dramatic descent in the belly of the curve, in the nine- to 15-year range.
On Monday, the benchmark 10-year yield closed down one basis point to 2.17%. The two-year yield held steady at 0.39% for a third consecutive session. The 30-year yield dropped two basis points to 3.81%.
Treasuries early Tuesday, much as they started the week, are somewhat weaker. The benchmark 10-year yield has risen five basis points to 2.09%.
The two-year yield has ticked up one basis point to 0.27%. The 30-year yield has climbed four basis points to 3.07%.
Yields started out Monday in similar fashion, rising to similar levels. By late afternoon, though, the market rallied after Standard & Poor’s placed 17 countries in Europe, including the large and steady economies, on negative watch.
Primary market volume is expected to hover around the $6 billion range this week. Industry estimates for anticipated market volume total $5.82 billion, versus a revised $5.88 billion last week. No particularly large deals are expected.
