NEW YORK — The muni market has been slow to start its day, despite the pricing of the largest deal of the week, which just hit the wires, a day ahead of schedule.
The trading session thus far has been marked with light activity, making any kind of turnover read of the market difficult.
But that could change. Selling pressure will likely increase as dealers try to unload inventory that has started to get heavy, according to a trader in California.
“Guys have stuff they’ve purchased over the last week or so that’s just not turning over,” he said. “So now they have stuff that everyone’s looked at, and they need to bring in something else. So, it’s a push to get rid of this stuff, because they’re not going to bring in anything new until they can sell the old.”
Tax-exempt yields are flat to slightly weaker heading into the afternoon. Yields for maturities beyond 2024 are flat to one basis point higher.
Muni yields were mostly flat across the curve at Friday’s close. The 10-year muni yield held at 2.15%, the lowest closing level ever recorded by MMD. For the week, the 10-year yield dropped 11 basis points.
The two-year muni yield stayed at 0.30%, its lowest yield in more than 40 years. In fact, it held at that level all week.
The 30-year muni yield ticked up one basis point to 3.79%. By the end of last week end, it had fallen nine basis points.
Treasury yields softened to start the day, but have since firmed somewhat. The benchmark 10-year Treasury yield is up two basis points to 2.09%.
The two-year yield ticked up one basis point to 0.21%, three basis points above its all-time low.
The 30-year yield is holding steady at 3.39%; last week it flattened the yield curve by plummeting 33 basis points.
New issuance remains lackluster. Industry estimates predict municipal bond sales of $3.65 billion this week, versus a revised $4.72 billion last week.
In negotiated deals, JPMorgan priced for institutions $494.4 million of King County, Wash., sewer revenue and refunding bonds, a deal that had been expected Tuesday.
