A rally in the Treasury market following Federal Reserve Board Chairman Ben Bernanke's testimony to the Congressional Joint Economic Committee, that removing monetary policy accommodation now could halt the recovery, left munis unaffected Wednesday morning.
"A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," Bernanke said in prepared remarks.
Munis were flat even as Treasuries and the stock market climbed. After Bernanke's remarks, the benchmark 10-year yield dropped five basis points to 1.89% and the 30-year yield slid four basis points to 3.10%. The two-year yield fell one basis point to 0.24%.
Munis were also quiet in the secondary as traders focused on many of the week's primary issues expected to price Wednesday.
Bank of America Merrill Lynch is expected to price for institutions $944.7 million of New York City general obligation bonds, rated A2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
In the second retail order period Tuesday, yields on the first series of $266.6 million ranged from 0.44% with 2% and 3% coupons in a split 2015 maturity to 2.33% with 3% and 4% coupons in a split 2023 maturity. Bonds maturing in 2013 and 2014 were offered via sealed bid. Bonds maturing in 2024 and 2025 were not offered for retail. The bonds are callable at par in 2023. Yields were increased five basis points from the first retail order period Monday.
Yields on the second series of $678.1 million ranged from 0.44% with a 5% coupon in 2015 to 3.00% priced at par in 2027. Bonds maturing in 2014 were offered via sealed bid. Portions of bonds maturing in 2015, 2016, 2024 and 2025 were not offered for retail. The bonds are callable at par in 2023. Yields were increased five basis points from Monday's retail order period.
Goldman, Sachs & Co. is expected to price for institutions $452.1 million of Los Angeles Department of Water and Power System revenue bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.
In retail pricing Tuesday, yields ranged from 0.78% with 3%, 4% and 5% coupons in a split 2017 maturity to 2.99% with a 5% coupon in 2032. The bonds are callable at par in 2023.
Goldman is also expected to price for retail $162 million of Louisiana GO refunding bonds, rated double-A by the rating agencies. Institutional pricing is expected Thursday.
Barclays is expected to price $140 million of Ohio University genera receipts bonds, rated Aa3 by Moody's and A-plus by Standard & Poor's.
On Tuesday, yields on the Municipal Market Data scale were as much as two basis points weaker. The 10-year yield increased one basis point to 1.84% and the 30-year yield rose two basis points to 3.02%. The two-year held steady at 0.28% for the ninth session.
The Municipal Market Advisors 5% scale showed yields rising as much as three basis points Tuesday. The 10-year and 30-year yields increased one basis point each to 1.90% and 3.12%. The two-year yield held steady at 0.33% for the eighth consecutive session.
In economic news, existing home sales rose 0.6% to 4.97 million-unit rate in April. The increase came just short of economists' expectations of a 4.99 million rate.
