The municipal market got a small jolt Tuesday afternoon that has followed over into Wednesday morning, lending to a firmer tone.
The week's larger deals either arrived one day early on Tuesday or were priced aggressively. All told, new issuance on the week has been well-received, traders say.
Investors' cash and resolve are also standing firm.
"There's still lots of cash; there's still lots of buying going on," a trader in New York said. "With the fact that it's not a very heavy primary week, it adds fuel to the fire. We're certainly firm."
Traders say yields look a little firmer on the morning, particularly in quality names. One market gauge has triple-A yields up to a basis point firmer for the 10-year.
The primary market expects supply to total $7.64 billion this week. That compares with a revised $7.44 billion last week.
The number approximates the amount the market has been seeing lately. Industry watchers say the market should absorb the volume with little difficulty.
On the negotiated side Wednesday morning, FirstSouthwest has priced $206.3 million of Conroe Independent School District, Texas, unlimited tax school building and refunding bonds. The bonds are rated Aaa/Aa2 by Moody's Investors Service and AAA/AA by Standard & Poor's.
Yields range from 0.340% with coupons of 2.00% and 4.00% in a split maturity in 2014 to 2.81% with a 5.00% coupon in 2035. Credits maturing in 2013 were offered in a sealed bid. The bonds are callable at par in 2021.
The benchmark 10-year muni yield dropped two basis points to 1.72% Tuesday. The 30-year yield slipped two basis points to 2.84%. The two-year held at 0.30% for the 20th consecutive trading session.
Treasuries yields started Wednesday mostly weaker. The benchmark 10-year yield has risen three basis points to 1.79%.
The 30-year yield has also climbed three basis points to 2.94%. The two-year yield has held steady at 0.30%.
In economic news, the Commerce Department reported Wednesday that sales of new single-family houses rose 5.7% to a seasonally adjusted annual rate of 389,000 in September.
The faster sales pace followed a revised August rate of 368,000, which was originally reported as 373,000. The September annual rate stands as the highest since April 2010's 422,000.
Economists polled by Thomson Reuters estimated a median annual rate of 385,000 for September. It also stood 27.1% above the September 2011 level of 306,000.