NEW YORK — As the U.S. rockets toward its debt ceiling Monday, the municipal market is proceeding gingerly into its week.
A relatively small calendar in the primary, summer vacations, and the debt-ceiling crisis are giving muni investors little reason to make any bold decisions or charge into the market.
A healthy increase in secondary activity this week will depend upon whether investors see more direction coming from Washington, D.C., a trader in New York said, then the markets could settle down and get back to work.
“There’s a certain tentativeness to the market,” he said. “Each day you creep toward next week, there’s more and more reason for the market to lay down and wait.”
The Municipal Market Data scale had not updated muni yields at press time. Yields were steady across all but the long end of the curve to end the week. Bonds maturing after 2033 fell one basis point.
The benchmark 10-year tax-exempt yield remained unchanged Friday at 2.68% after falling in previous trading sessions. The two-year yield once again held at its low for the year, 0.40%, for a ninth straight session. The 30-year yield fell one basis point on the day to 4.34%.
Treasury yields started off the week higher across the curve. The 10-year yield rose five basis points to 3.02%. The 30-year yield leaped eight basis points to 4.34%. The two-year yield increased two basis points to 0.42%.
This week’s volume estimate shows a decrease in new deals. About $4.1 billion in new issuance is expected, after $8.3 billion came to market last week, the largest volume for new debt offerings this year.
The competitive market is expected to have this week’s biggest deal. On Wednesday, triple-A rated Maryland is expected to issue more than $600 million of general obligation bonds in four separate pricings.
Also on Wednesday, the San Diego County Water Authority is expected to issue $175 million of refunding bonds.
In the negotiated market, the Maine Health and Higher Education Facilities Authority is expected to issue $290 million of Series 2011 revenue bonds for the Maine General Medical Center. The bonds are expected to price Wednesday. Also, Columbus, Ohio, is expected to issue $289.5 million of triple-A rated various purpose GO bonds.
The market this week should also have more economic indicators of the nation’s overall health to consider for their investment calculations. There will be numerous homes sales indicators and measures of consumer sentiment, in addition to the expected indicators for jobs and prices.
