The tax-exempt market continued to head lower Friday afternoon as the benchmark 10-year Treasury yield broke through 2.85%.
"The 10-year is off nine basis points today so the softness is coming from the Treasury market," a Virginia trader said. "Munis are probably holding in a little better than Treasuries because it's a quiet summer Friday, but we could see some catch-up on Monday after a big selloff Friday in Treasuries."
This trader added the new-issue supply calendar still looks manageable for next week which could help insulate munis from Treasuries' weakness.
The market can expected $4.10 billion in new issues next week, up from this week's revised $3.82 billion. In negotiated deals, $3.40 billion is expected, up from this week's revised $3.18 billion. On the competitive calendar, $702.8 million is expected to be auctioned, up from this week's revised $635.4 million.
Thursday, yields on the Municipal Market Data scale ended as much as five basis points higher. The 10-year yield rose five basis points to 2.85% and the 30-year yield increased four basis points to 4.37%. The two-year finished flat at 0.43% for the 22nd consecutive session.
Yields on the Municipal Market Advisors scale ended as much as six basis points higher. The 10-year yield rose five basis points to 3.00% and the 30-year yield climbed four basis points to 4.46%. The two-year yield rose one basis point to 0.55%.
Treasuries continued to weaken Friday afternoon. The benchmark 10-year yield rose eight basis points to 2.85% and the 30-year yield climbed seven basis points to 3.88%. The two-year yield rose one basis point to 0.36%.
