Yields on municipal bonds rose across the curve Wednesday afternoon as supply remained limited and investors waited to hear an update on tapering from the Federal Reserve.
"We're feeling some softness and weakness in the market right now and there's not a lot of issuance," a New York-based trader said in an interview. "January has been good and there has been some cash but right now and we're kind of in a wait and see."
The Federal Open Market Committee will announce any changes to its asset-purchasing plans, which it began to taper after its last meeting.
Market observers have attributed January's rally to a lack of new-issue bonds, which has pressured buyers to compete over a limited number of bonds. The market has stalled this week, with yields jumping again Wednesday by as much as three basis points in some areas on the curve, according to Municipal Market Data.
Volume this week could reach $4.89 billion, according to Bond Buyer and Ipreo data. Total bond sales last week came to $4.57 billion, according to Reuters.
In the negotiated market, Goldman, Sachs & Co. priced $378.7 million of Illinois State Toll Highway Authority bonds for institutions.
Yields on the bonds ranged from 1.73% with a 5% coupon maturing in 2019, to 2.77% with a 5% coupon in 2022. The refunding bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch, were not offered with an optional call feature.
Yields on municipal bonds maturing from 2022 to 2026 gained as much as three basis points Wednesday, according to MMD. Bonds maturing sooner than 2018 were steady, while most other areas along the curve gained one to two basis points in yield.
Treasuries were mostly firmer Wednesday, with the 10-year yield down three basis points to 2.72%. The 30-year yield declined one basis point to 3.66%, while the two-year was unchanged at 0.36%.
