Market Post: Muni Yields Start Somewhat Weaker on Low Activity

The municipal market sees traces of activity Monday, showing a slightly softer market.

Participants are taking concessions to move paper, a trader in New York said.

"We bought some three-year paper, and got three ticks out of them," the trader said. "I'd say the market's about three ticks cheaper; but it's a forced trade, definitely done to get some stuff moving."

This week, $6.45 billion is expected to reach the market. This represents an increase from last week's revised $5.24 billion.

The industry expects to see $5.05 billion in negotiated deals, up from last week's revised $3.27 billion. On the competitive calendar, $1.40 billion should be auctioned, a decline from this week's revised $1.97 billion.

No deals top $400 million, however. A deal consisting of airport revenue improvement bonds for Dallas-Fort Worth International Airport, at $366.0 million, and a Los Angeles deal for wastewater system revenue bonds, at $344.4 million, should lead all issues.

"With supply the way it is, we should probably be getting richer here," the trader said. "But Treasuries have been trying to help us push back. So, there's a little bit of balance there, it seems."

The market has started the week steady, according one market scale. The same cannot be said for Friday, when the market sold off beyond the front end of the curve.

Yields on the Municipal Market Data triple-A GO scale finished as much as six basis points higher Friday. The 10-year and 30-year yields jumped six basis points each to 1.81% and 2.93%, respectively. The two-year was steady at 0.28% for the second session.

Yields on the Municipal Market Advisors 5% scale ended the week as much as five basis points higher. The 10-year and 30-year yields jumped five basis points each to 1.85% and 3.06%, respectively, on Friday. The two-year yield increased one basis point to 0.33%.

After a rough Friday, Treasury yields started the week higher past the front end of the curve. The benchmark 10-year yield has climbed three basis points to 1.93%, after jumping eight basis points on Friday.

The 30-year yield has skipped up three basis points to 3.13%, after vaulting 11 basis points on Friday. The two-year yield is holding steady at 0.25%.

In economic news, the Commerce Department reported Monday that retail sales increased just 0.1% to $419 billion in April. By comparison, they fell a revised 0.5% in March, which had originally been reported as a 0.4% dip.

Economists polled by Thomson Reuters anticipated April sales would be weaker by 0.3%. On a year over year unadjusted basis, retail sales have risen 3.7%.

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