NEW YORK — The municipal market is entering a period some traders consider “quiet time” before Labor Day, after which the calendar and general activity typically pick up. Appropriately, activity in the secondary market is light, a trader in New Jersey said.
During such a period, Treasury yields should waffle at current levels, he added, with the 10-year between 2.05% and 2.20%. He also expects little action from the Municipal Market Data scale.
But there is still room for opportunities, he said.
“Typically, the end of summer is a quiet time,” he said. “But in the years past, when you have a lot of people not focused, that’s when you can get some pretty good trades done; you just need to find the right buyer and seller. There are probably a few people who want to get some things done before September.”
Tax-exempt yields are mostly flat to start the day, with some softening at the long end of the curve. Yields for maturities beyond 2033 are flat to one basis point higher.
Muni yields were mostly flat across the curve at Friday’s close. The 10-year muni yield held at 2.15%, the lowest closing level ever recorded by MMD. For the week, the 10-year yield dropped 11 basis points.
The two-year muni yield stayed at 0.30%, its lowest yield in more than 40 years. In fact, it held at that level all week.
The 30-year muni yield ticked up one basis point to 3.79%. By the end of last week end, it had fallen nine basis points.
Treasury yields softened to start the week. The benchmark 10-year Treasury yield jumped five basis points to 2.12%.
The two-year yield ticked up one basis point to 0.21%, three basis points above its all-time low.
The 30-year yield rose three basis points to 3.42%; last week it flattened the yield curve by plummeting 33 basis points.
New issuance remains uninspiring. Industry estimates predict municipal bond sales of $3.65 billion this week, versus a revised $4.72 billion last week.
“There aren’t any major deals that we’re supposed to keep an eye on this week,” the trader said.
The largest deal this week is in the negotiated market. De La Rosa & Co. is expected to price $452.1 million of San Francisco Airport Commission taxable and tax-exempt bonds for San Francisco International Airport on Tuesday and Wednesday.
JPMorgan is expected to price $403 million of King County, Wash., sewer revenue and refunding bonds. And Wells Fargo is expected to price $175 million of Houston combined utility system first-lien revenue refunding bonds on Tuesday.
The major equities indexes started Monday’s session up at least 1.28%. The Dow Jones Industrial Average has climbed 138 points this morning.
