NEW YORK — The municipal market has started the post-holiday weekend much where it left off: with a rally.
As fears of the debt crisis afflicting banks in Europe have spurred a rally in U.S. Treasury yields, so have muni yields followed. Early reads on tax-exempt yields are seeing sizable gains across, once again, all but the front end of the curve, according to the MMD scale.
For maturities in 2017 through 2109, yields are flat to four basis points lower. Yields with maturities beyond 2019 are three to seven basis points lower.
The benchmark 10-year yield on Friday fell seven basis points to 2.17% to end the day. The 30-year yield plummeted 10 basis points on the day to 3.78%.
The two-year yield remained unchanged at 0.30% for an 18th consecutive session, continuing to hover at its lowest level in more than 40 years.
Treasuries emerged from the long weekend with momentum. Yields beyond the front end of the curve continue to move ever-lower, flattening out the curve.
The 10-year benchmark yield has dropped seven basis points to record territory at 1.94%, reaching levels it hasn’t seen in more than 50 years.
The 30-year yield has dropped 9 basis points on the morning to 3.23%. The two-year yield, though, has held steady at 0.21%.
Despite the holiday, new-issuance volume is expected to rise this week. Industry estimates place the total for the week at $2.99 billion, versus a pathetic $1.72 billion that came to market last week.
Goldman, Sachs & Co. is expected to price the biggest deal this week on Thursday, $511 million of Harris County, Texas Metropolitan Transit Authority sales and use tax bonds.
Siebert Brandford Shank & Co. is also expected to come to market Thursday with $350 million of The New York State Thruway Authority state personal income tax revenue bonds.
In addition, Citi is expected to price more than $250 million of Fulton County, Ga., water and sewerage revenue refunding bonds on Tuesday.
The equities markets are all down by at least 2.10%. The Dow Jones Industrial Average has so far fallen 251 points from Friday’s close.
