NEW YORK — The municipal market is seeing light volume and little follow-through interest in blocks on the long end of the curve Monday.
Treasury yields, already barrel-scraping, seemed prime to fall lower. But Treasury and muni yields aren’t yet factoring in developments concerning the ongoing troubles in Europe. Greece is widely expected to default on its debt.
Out of the last five trading sessions, volume is around 33% of what traders normally see at this time of the year, a trader in New York said. For the last 30 days, secondary market activity is roughly 30% of where it normally is.
“It’s a little light,” the trader said. “But it’s typical for what we’ve been seeing. With the 10-year Treasury [yield] around and below 1.90%, people are waiting to see where things settle.”
Tax-exempt yields remain steady across the curve, according to the Municipal Market Data scale.
The benchmark 10-year yield Friday once again reached a record low, as measured by MMD. It ticked down one basis point on the day to 2.07%. It fell 10 basis points on the week.
The 30-year yield also inched down a basis point to 3.66%, its lowest level in at least three decades. For the week, it has dropped 12 basis points.
The two-year yield held fast at 0.30% for a 22nd consecutive session, hovering at its lowest level in more than 40 years.
Treasury yields are mostly flat to start the week. The 10-year benchmark yield is unchanged at 1.92%, lingering around levels it hasn’t seen in roughly 50 years.
The 30-year yield has firmed one basis point to 3.24%. The two-year yield is holding at 0.18%.
Volume in the primary appears to be creeping up from last week’s paltry level. New issuance for this week is expected to be $4.65 billion, not including $5.4 billion of California revenue anticipation notes. Estimates for last week’s volume were revised downward to $1.95 billion.
The biggest deal on the way is expected to be California’s short-term revenue anticipation note sale —not included in long-term weekly issuance figures. The Wells Fargo-priced $5.4 billion issue is expected to arrive Thursday via negotiation.
JPMorgan is expected to price JEA’s $360 million of new money and $9.4 million of refunding bonds for the St. Johns River Power Park System.
Bank of America Merrill Lynch is expected to be the lead book runner on $300 million of airport system refunding revenue bonds Wednesday for the Hawaii Department of Transportation.
JPMorgan is expected to price $300 million of Sacramento Municipal Utility District revenue refunding bonds Wednesday.
On the competitive side of the ledger, New York City Municipal Water Finance Authority is expected to auction $457.9 million revenue bonds Tuesday. Prince George’s County, Md., is expected to sell $191 million of general obligation bonds Thursday.
