Municipal bonds were steady to firmer Monday morning as market participants began a week that will likely be dictated by the Federal Open Market Committee announcement on Wednesday.
"Not too much is happening this morning but we're seeing some offers out there," one trader in New York said in an interview. "The market has a stable to more firm tone to it that might dry up as we get closer to the end of the day."
On Friday, the Bureau of Labor Statistics said the producer price index, which measures price changes in goods from the perspective of the seller, fell 0.1%, following a decline of 0.2% in October. A softening in the number is typically good for the municipal market, the trader said.
Estimates for the coming week's volume point to a lighter offering of new issues than last week's heavy calendar. Potential muni bond volume on the week should total $2.59 billion, from sales of about $10.63 billion last week, per Ipreo, The Bond Buyer and Thomson Reuters.
Several issues on the negotiated calendar this week top $100 million, led by $283 million of Pennsylvania Economic Development Financing Authority parking revenue bonds, which Guggenheim Securities expects to price. A retail order period will be held Monday, followed by pricing on Tuesday. In the competitive market, Massachusetts is expected to auction $525 million of general obligation bonds, on Tuesday.
Yields on the Municipal Market Data triple-A scale Monday were firmer throughout most of the curve, including as much as a two-basis-point drop in yields on bonds with maturities from 2024 to 2035. Bonds maturing from 2019 to 2023, as well as from 2036 to 2043, saw yields fall a basis point. Yields on bonds from 2018 and in remained steady.
Treasury yields mostly fell Friday. The benchmark 10-year yield slid two basis points to 2.85%, while the 30-year yield has dropped one basis point to 3.86%. The two-year yield has held at 0.33%.