The tax-exempt market traded mostly steady Friday afternoon even as Treasuries continued to weaken on positive economic data.
Muni participants paused trading on Friday to wait for next week's more than $11 billion in new issuance expected to hit the market.
"The market might be following Treasuries weaker slightly, but not really," a San Francisco trader said. "Periodically I see a couple spots where guys are wanting to do something a couple basis points cheaper but not much."
He added trading has started to slow. "I hate to say that holiday trading has already started to set in but it seems like it. I'm just not seeing a lot of action in the secondary or anything worth buying given these levels."
With next week expected to see an uptick in primary issuance, this trader said he hopes that will help loosen up spreads in the secondary. "Hopefully the big primary will bring stuff out in the secondary if people are all focused on new issues."
In the primary market Friday, Citi priced for retail $850 million of New York City general obligation bonds, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings. A second retail order period is expected Monday followed by institutional pricing Tuesday. Pricing details were not available by press time.
On Thursday, the Municipal Market Data scale ended steady for the third consecutive trading session. The 10-year yield finished flat at 1.48%, one basis point above the 1.47% record low set Nov. 28. The 30-year yield ended unchanged at 2.48%, dangling above its record low of 2.47% set Nov. 28. The two-year finished flat at 0.30% for the 49th consecutive trading session.
Treasuries continued to sell off on positive economic data. The benchmark 10-year yield and the 30-year yield jumped five basis points each to 1.63% and 2.82%, respectively. The two-year was steady at 0.25%.