NEW YORK — With little activity in the primary and secondary, the municipal bond market is settling into a slow, pre-holiday week.
Traders have mostly returned from last weekend’s hurricane. Offerings that are made are firm. But investors aren’t on the same page when it comes to yields, said a trader in California.
“People are trying to buy at yesterday’s prices, so it results in very little transactions happening,” the trader said. “The market was down; there wasn’t much of a bid yesterday. So, people say, ‘I’d pay yesterday’s price.’”
The Municipal Market Data scale had yet to update tax-exempt yields at press time. They were mostly unchanged throughout the curve earlier in the morning. Securities maturing between 2020 and 2022 were flat to one basis point lower.
Treasury yields have firmed across the curve heading into the afternoon, holding the morning’s gains. The 10-year benchmark yield, after climbing nine basis points at the close, has dropped eight basis points to 2.20%.
The 30-year yield, after rising eight basis points Monday, has fallen eight basis points to 3.54%. The two-year yield has inched down two basis points to 0.20%, after ticking up two basis points Monday.
The benchmark 10-year muni yield ticked up one basis point to 2.27%. The 30-year muni yield also rose one basis point on the day, to 3.89%.
The two-year yield remained at 0.30% for a 14th straight session, hovering at its lowest yield in more than 40 years.
New issuance the week before Labor Day is usually low, and this week is not expected to be any different. According to industry estimates, municipal bond sales scheduled for this week should total a scanty $1.2 billion, compared to a revised $4.4 billion last week.
In the biggest negotiated deal of the week thus far, Wells Fargo Securities priced for retail $126.2 million of Tampa, Fla., water and sewer systems improvement and refunding revenue bonds. The bonds are rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings.
Yields range from 0.53% with a 2.00% coupon in 2013 to 4.18% with a 4.125% coupon in 2031. Debt maturing in 2012 was offered in a sealed bid.
