Despite a small selloff over the past two trading sessions, traders in the tax-exempt market continued to express frustration over yields still hovering near their record lows.
Municipal bonds were weaker Friday and Tuesday, but yields rose only three basis points during that time - hardly enough to induce interest.
"Traders haven't released the inventory yet, so I'm just killing time until they do," a New Jersey trader said. "I wish I had something interesting or different to tell you, but I'm just seeing the same bonds offered every single day. There is a lot of stuff that's more interesting than munis right now."
The primary market should provide some excitement as many of the week's largest deals are expected to hit the market. Bank of America Merrill Lynch is expected to price for retail $887 million of Dormitory Authority of the State of New York personal income tax revenue bonds, rated AAA by Standard & Poor's and AA by Fitch Ratings. Institutional pricing is expected Thursday.
Barclays is expected to price $700 million of City and County of Denver, Colo., Department of Aviation airport system revenue bonds, rated A1 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch.
In the competitive market, South Carolina Transportation Infrastructure Bank is expected to auction $432.28 million of revenue bonds, rated A1 by Moody's and A by Fitch.
Maryland's Montgomery County should auction $318 million of general obligation bonds in two pricings - a $295 million deal and a $23.2 million deal.
On Tuesday, the 10-year Municipal Market Data yield and the 30-year yield rose one basis point each to 1.70% and 2.87%, respectively. The two-year closed flat for the 10th session at 0.30%.
The 10-year yield now trades 10 basis points above its record low of 1.60% set July 26. The 30-year yield is up eight basis points from its record low of 2.79% hit July 25.
Treasuries were much weaker Wednesday morning following gains on Tuesday. The benchmark 10-year yield jumped three basis points to 1.75% while the 30-year yield increased two basis points to 2.95%. The two-year was steady at 0.27%.