The tax-exempt market continued to weaken Tuesday afternoon as traders said yields continued to climb over the past few trading sessions.
Munis were weaker, following a weaker session on Friday, despite gains in Treasuries.
“I noticed a few bonds in our inventory did cheapen up like 10 basis points since last week,” a New Jersey trader said.
The competitive calendar took the lead Tuesday. California’s Fontana Unified School District auctioned $308.9 million of general obligation bonds in two pricings – a $87.93 million deal and $220.93 million deal. Pricing details were not available by press time.
Bank of America Merrill Lynch won the bid for $120 million of Milwaukee school revenue anticipation notes, rated MIG-1 by Moody’s Investors Service and SP-1-plus by Standard & Poor’s. The bonds yielded 0.19% with a 1.5% coupon in 2013.
On Friday, the 10-year Municipal Market Data yield and the 30-year yield rose two basis points each to 1.69% and 2.86%, respectively. The two-year closed flat for the ninth session at 0.30%.
The 10-year yield now trades nine basis points above its record low of 1.60% set July 26. The 30-year yield is up seven basis points above is record low of 2.79% hit July 25.
Treasuries continued to gain Tuesday afternoon. The benchmark 10-year yield fell two basis points to 1.71% while the 30-year yield dropped three basis points to 2.93%. The two-year was steady at 0.26%.