NEW YORK – The tax-exempt market continued to strengthen for the fourth consecutive trading session as limited primary issuance forced participants to turn to the secondary market for direction.
“It’s busy for a Monday, although that’s not saying much,” a New York trader said. He added while primary supply is down this week, there is still plenty of supply left over from the past few weeks which is keeping dealers busy.
Munis continued to strengthen Monday afternoon, according to the Municipal Market Data scale. Yields inside five years were steady while the six- to eight-year yields fell up to two basis points. The nine- to 11-year yields dropped up to three basis points while the 12-year yield fell up to two basis points. Outside 13 years, yields were steady to one basis point lower.
On Friday, the two-year yield finished steady at 0.36%. The 10-year yield plummeted eight basis points to 2.17% while the 30-year yield fell two basis points to 3.40%.
Treasuries were weaker Monday but erased most of their early morning losses. The benchmark 10-year yield and the 30-year yield each rose two basis points to 2.26% and 3.34%. The two-year yield was steady at 0.36%.
In the primary calendar, JPMorgan priced $256.2 million of King County, Wash., sewer revenue and refunding and limited-tax general obligation refunding bonds.
The $132.5 million of sewer bonds are rated Aa2 by Moody’s Investors Service and AA-plus by Standard & Poor’s. The $123.7 million of limited-tax refunding GOs are rated Aa1 by Moody’s and AAA by Standard & Poor’s. Pricing details were not yet available.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming.
A dealer sold to a customer Minnesota Public Facilities Authority 5s of 2019 at 1.60%, nine basis points lower than where they traded a week before.
A dealer sold to a customer Massachusetts Water Resources Authority 5s of 2037 at 3.66%, six basis points lower than where they traded last week.
A dealer bought from a customer California State Public Works Board 5s of 2037 at 4.85%, four basis points lower than where they traded Friday.
A dealer bought from a customer Employees Retirement System of Puerto Rico 6.15s of 2038 at 6.55%, three basis points lower than where they traded a week prior.
