NEW YORK – The tax-exempt market was slow Monday as traders geared up for a busy week in the primary market.
“Munis are flat,” a New York trader said. “It’s a quiet Monday.”
The Municipal Market Data scale was not updated by press time. On Friday, the two-year yield closed steady at 0.33% for the fifth consecutive trading session. The 10-year yield and the 30-year yield each dropped three basis points to 1.97% and 3.32%.
Treasuries were stronger. The benchmark 10-year yield fell three basis points to 1.96% while the 30-year yield dropped two basis points to 3.11%. The two-year was steady at 0.27%.
In the primary market this week, $7.45 billion is expected to be issued, up from last week’s revised $6.43 billion. On the negotiated calendar, $5.13 billion is expected, up from last week’s revised $4.96 billion. In competitive offerings, $2.32 billion is expected to come to market, up from last week’s revised $1.47 billion.
Wells Fargo is expected to price $600 million of New York Metropolitan Transportation Authority revenue bonds, rated A2 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings.
In the competitive market, Albuquerque, New Mexico, is expected to auction $78.9 million of general obligation bonds, rated Aa1 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch.
In economic news, retail sales rose 0.8% to $411.1 billion in March, after rising 1.0% in February. The gain was better than the 0.3% rise estimated by economists.
“Though retail sales were significantly stronger than expected in March, part of this strength was in areas that do not feed into GDP calculations,” wrote economists at RDQ Economics. “Nonetheless, data on retail sales excluding autos, building materials and gasoline suggest that consumer spending picked up in the first quarter – this core measure of retail sales rose 5.9% at an annual rate in the first quarter versus 4.9% in the fourth quarter. Thus, we view the data as consistent with a real PCE increase of about 2.5% in the first quarter, which is stronger than consensus forecasts published last week.”