The tax-exempt market continued to head lower as traders said the market felt a tad weaker Wednesday morning.
Despite strong demand in the market, munis have followed Treasuries lower so far this week.
"There are a few new issues keeping us busy," a New Jersey trader said. "As far as last week goes we were looking at the Dormitory Authority of the State of New York PIT bonds and those are trading a little weaker in odd lots. The New York Metropolitan Transportation Authority deal that came earlier this week looks OK in the secondary."
The trader said the bid side is weaker Wednesday than it was Tuesday. "The market is a few basis points weaker, but nothing extreme."
In the primary market, Loop Capital Markets is expected to price for retail $600.2 million of California State Public Works Board lease revenue and lease revenue refunding bonds, rated A2 by Moody's Investors Service and BBB-plus by Standard & Poor's and Fitch Ratings. Institutional pricing is expected Thursday.
Bank of America Merrill Lynch is expected to price for retail $240 million of Arizona Banner Health System tax-exempt and taxable bonds. Institutional pricing is expected Thursday.
Barclays is expected to price for institutions $225 million of Pennsylvania Turnpike Commission turnpike subordinate revenue bonds following a retail order period Tuesday. The credit is rated A3 by Moody's and A-minus by Standard & Poor's and Fitch.
JPMorgan is expected to price Utah County hospital revenue bonds on behalf of the IHC Health Services, rated Aa1 by Moody's and AA-plus by Standard & Poor's.
In the competitive market, Wisconsin is expected to issue $302.6 million of general obligation bonds, rated AA by Standard & Poor's.
Maryland Economic Development Corp. should auction $199.3 million of revenue bonds, rated Aa1 by Moody's and AA-plus by Standard & Poor's.
On Tuesday, the 10-year Municipal Market Data yield jumped two basis points to 1.71% while the 30-year yield increased one basis point to 2.83%. The two-year was steady at 0.30% for the 15th consecutive trading session.
Treasuries headed lower Wednesday after a sell-off Tuesday. The benchmark 10-year yield jumped seven basis points to 1.79% while the 30-year yield spiked up six basis points to 2.98%. The two-year yield increased one basis point to 0.28%.
In economic news, housing starts rose 15% in September to a seasonally adjusted rate of 872,000 following an upwardly revised estimate of 758,000 in August. Building permits jumped 11.6% to an annual rate of 894,000.
Housing starts far exceeded the 770,000 projected by economists as did building permits, which outpaced the 810,000 expected by economists.
"While we believe that housing has turned the corner and that price, sales, and production activity are headed higher, the extent of the gains in starts and permits surprised us in September and points to a larger contribution to GDP growth in the fourth quarter than were estimating," wrote economists at RDQ Economics. "Increases were evident in both single- and multi-family activity and in all regions apart from the Northeast. For 2013 we look for housing starts to average around one million."