The municipal bond market saw prices strengthen across the board as traders prepare for the week's new tax-exempt volume.
The calendar consists of approximately $12.5 billion of new issue supply and traders are awaiting the bulk of the deals which will be coming on Tuesday and Wednesday.
The Bond Buyer's 30-day visible supply totals about $18 billion, consisting of almost $13 billion of negotiated deals and around $5 billion of competitive sales.
"That number has grabbed everybody's attention," a trader in Texas said. "It means there's some supply down the road."
Primary Market
The new issue market is gearing up for the first big sales of the week on Tuesday - the New York State Urban Development Corp.'s three tier competitive offering. Up for bid are $372 million taxable state personal income tax revenue bonds, $424 million Group A and $515 million Group B state personal income tax revenue bonds.
On Wednesday, the largest deal of the week is scheduled to be priced - the Texas Transportation Commission's $1.6 billion general obligation mobility fund bonds. The issue will be priced by Bank of America Merrill Lynch.
Also on Wednesday's negotiated slate are New York State Thruway Authority's $750 million general revenue refunding bonds to be priced by Goldman, Sachs; Miami-Dade County, Fla., $750 million aviation revenue refunding bonds, AMT and non-AMT, to be priced by Wells Fargo Securities; and Phoenix, Ariz., Civic Improvement's $160 million junior lien water system revenue bonds, to be priced by Bank of America Merrill Lynch.
In the competitive arena on Wednesday, the state of New Jersey will sell $525 million general obligation bonds on Wednesday and the Los Angeles, Calif., MTA will offer $140 million revenue bonds for sale.
"There's lots of deals in the $200 million-plus area," the Texas trader said. "And they will drive the train this week."
He added that there was some retail trading going on, cleaning up from last week. He said that many bonds with 2% coupons were now being sought out. "Last week you couldn't give them away, now you see them being snapped up."
Secondary Market
At mid-session, municipal bond yields were lower, with the benchmark 10-year general obligation yield at unchanged to two basis points lower (one to three points with the December roll) from Friday's close of 2.08% and 30-year GO was off from one to three basis points from at 3.01% on Friday, according to the preliminary read of MMD's triple-A scale.
The MMD read for the 2024 maturity includes adjustments for the December roll as Monday's final closing curve will reflect December maturities.
On Monday, Treasury prices were mostly higher, with the two-year note yielding 0.48%. The 10-year yield was yielding 2.21% while the 30-year was yielding 2.94%.
On Friday, the 10-year muni-to-Treasury ratio closed at 95.6%, up from 94.4% on Wednesday. The 30-year muni to Treasury ratio closed at 104.0%, compared with 103.3% on Wednesday.
Muni Bond Funds See Inflows
Late on Friday, weekly reporting municipal bond funds reported $564 million of net inflows in the week ended Nov. 26, compared with $590 million of inflows the previous week, according to data released by Lipper FMI. The four-week moving average remained positive at $472.1 million. Funds have seen inflows in 41 out of the 48 weeks in 2014.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 7,136 trades on Friday for volume of $3.313 billion.
Most active on Friday, based on the number of trades, were the New Jersey State Trust Fund Authority's Transportation Program's 2014 Series AA 4 ¼s of 2044 which traded 46 times with an average price of 99.453 for an average yield of 4.28%.
