NEW YORK — Light trading flows are on tap for the remainder of the afternoon, as municipal yields lend a weaker tone to the market.
Next week should elicit more of the same, a trader in New York said. “The tone is definitely weaker out there,” he said. “I’m looking next week at supply and not seeing any big deals coming.”
Also, low absolute yields have kept investors and traders alike on the sidelines. There are a lot of bounces from some of the deals from the past two weeks, the trader said.
“It seems like some of the deals haven’t been blowouts,” he said.
At press time, the Municipal Market Data scale read had not been updated. But muni yields rose at the longer end of the curve to start the day. Tax-exempts maturing between 2012 and 2017 were steady. Yields for maturities between 2018 and 2041 are flat to two basis points higher.
Both the benchmark 10- and 30-year muni yields each soared five basis points to 2.75% and 4.35%, respectively. The two-year yield held at 0.42%, holding for the 14th straight session.
Treasury yields, which pushed higher for most of the week, had started the morning a tad lower. By noon, they reversed course to continue on the week’s upward path. The 10-year yield climbed four basis points to 3.21%. The two-year yield skipped up two basis points to 0.49%. The 30-year yield increased two basis points to 4.40%.
There aren’t many deals slated for the holiday-shortened week. Issuers expect to sell an estimated $1.3 billion of municipal bonds next week, against a revised $8.2 billion that was sold this week, according to data from The Bond Buyer. This week’s revised number came in far higher than the original estimated figure of $5.62 billion.
Next week’s primary issuance won’t entice participation, the trader said. “The calendar is not significant at all, so you may see people hold on,” he said. “If they see more deals coming, they may be forced to sell. But we’re not seeing it yet.”
