NEW YORK – Buying and selling in the tax-exempt market is tentative on Monday as lack of motivation stalls the market.
“I wouldn’t say there is any sort of motivated buying or selling,” said a trader in Chicago. “If you want to really buy something you’re going to have to make a statement with a big price. And if you want to sell something you’re going to have to make a statement with a cheap offering.”
The trader added he doesn’t think there is a lot of motivation in the secondary. “I’m not seeing it awash with peopling who are buying and I’m not looking at huge bid-wanted lists,” he said. “Everyone is watching these deals to see how they set up.”
He said as the end of the year approaches there will not be a lot of guessing. “There are firms that want to build for January 1 and firms that want to be flat on December 31,” he said. “Everyone knows what the strike zone looks like and has their marching orders for the end of the year.”
Munis were mostly flat in Monday early afternoon trading, according to the Municipal Market Data scale. Yields on the seven- to nine-year maturities fell one or two basis points while yields on the short and long end remained flat.
On Friday, the two-year muni yield closed flat at 0.36% for its third consecutive trading session, while the 10-year remained at 1.97%. The 30-year muni yield held its ground at 3.69%.
Treasuries continued to rally in Monday early afternoon trading, with the benchmark 10-year yield and the 30-year yield falling seven basis points each to 2.00% and 3.04%, respectively. The two-year yield held steady at 0.24%.
There were no major deals in the primary market Monday, but issuance is expected to pick up later in the week. The market can expect $5.69 billion, with $4.09 billion in negotiated and $1.6 billion in competitive deals.
The secondary market was showing strength on Monday. Munis were firming across the curve, with the most action in the 10-year spot.
A dealer bought from a customer University of Connecticut 5s of 2024 at 2.65%, 11 basis points lower than where they traded Friday.
Bonds from an interdealer trade of Rockwall, Texas, Independent School District 5s of 2023 yielded 2.52%, nine basis points lower than where they traded last Thursday.
Bonds were firming longer out on the curve as well. Bonds from an interdealer trade of Massachusetts Development Finance Agency 5s of 2036 yielded 4.47%, five basis points lower than where they traded Friday. Bonds from an interdealer trade of a different CUSIP of Massachusetts Development Finance Agency 5s of 2041 yielded 4.53%, five basis points lower than where they traded Friday.
