NEW YORK – The tax-exempt market is holding steady ahead of a large calendar Wednesday with two billion-dollar-plus deals expected to price.
“Yields are pretty steady and we need to see how the New Jersey Transportation deal is received,” said a trader in New Jersey, referring to the $1.3 billion New Jersey Transportation Trust Fund Authority deal Morgan Stanley is expected to price. “Retail is showing interest here.”
He added there is a “huge calendar we need to wade through.” And while U.S. Treasuries a gaining a bit, “munis aren’t going to move based on government markets,” the trader added. “They want to see how we handle supply. Everything is in front of us so to speak.”
He added there is not much trading in the secondary market Wednesday morning.
Yields were steady across the curve early Wednesday morning, according to the Municipal Market Data scale.
On Tuesday, the 10-year yield finished up five basis points to 2.33% while the 30-year yield finished up three basis points to 3.81%. The two-year closed flat for its tenth consecutive trading day at 0.42%.
Treasuries gained in early Wednesday trading. The benchmark 10-year and the 30-year were each down three basis points to 2.02% and 3.06%, respectively. The two-year was flat at 0.25%.
In the primary market, Bank of America Merrill Lynch will hold a second retail order period on $1.3 billion Hawaii general obligation bonds. The credits are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Barclays Capital is expected to price for retail $787.6 million of Minnesota Tobacco Securitization Authority tobacco settlement revenue bonds. The bonds are rated A by Standard & Poor’s and BBB-plus by Fitch.
Bank of America Merrill Lynch is expected to price for institutional investors $529.2 million of Arizona Transportation Board subordinated highway revenue bonds, rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.
Citi is expected to price for institutional investors $400 million of Puerto Rico Sales Tax Financing Corp. sales tax revenues bonds. The credits are rated A1 by Moody’s and A-plus by Standard & Poor’s and Fitch Ratings.
Bank of America Merrill Lynch is expected to price for institutional investors $275 million of Omaha Public Power District bonds.
In the competitive market, the Maryland Economic Development Corp. will auction $163.4 million of lease revenue bonds.
In economic news, consumer prices fell 0.1% in October after rising 0.3% the previous month on a seasonally adjusted basis, the Labor Department reported.
Core consumer prices, which exclude food and energy, were up 0.1% for the month.
“The Fed finally gets validation of its claim that inflation has moderated as the headline CPI inflation rate on a year-over-year basis dipped for the first time since November 2010,” wrote economists at RDQ Economics. “Core inflation continues to creep higher as the year-over-year core CPI inflation rate edged up to 2.1%, which is the highest core inflation rate since October 2008. We expect core CPI inflation to continue to drift higher.”
In other economic news, industrial production increased 0.7% in October, after a revised 0.1% decline in September.
