The tax-exempt market opened on a slow note Tuesday morning as buyers waited for primary issuance to provide trading momentum.
"Munis are dead on arrival today," a Chicago trader said. "There are only a couple big block trades."
He added that with yields so low, trading volume has started to quiet down. "Lately it's brutal. Everyone hates the levels but the funds keep getting money in so they do minimal buying."
In the primary market Tuesday, Raymond James is expected to price $211.5 million of Lewisville, Texas, Independent School District unlimited tax refunding bonds, rated triple-A and guaranteed by the Texas Permanent School Fund Guarantee Program.
Bank of America Merrill Lynch is expected to price for retail $158.5 million of Oklahoma City Water Utilities Trust water and sewer system revenue refunding bonds, rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's. Institutional pricing is expected Wednesday.
In the competitive market, San Francisco Public Utilities Commission should auction $335.3 million of revenue bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Los Angeles, Calif., should price $152.4 million of revenue bonds in two pricings, rated Aa2 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch Ratings. The first pricing should consist of $71.7 million of bonds followed by $80.7 million.
Municipal bond market reads finished steady to stronger Monday.
The Municipal Market Data triple-A GO scale ended steady to two basis points firmer. The two-year yield fell two basis points to 0.32%. The 10-year yield was steady at 1.80% for the third straight session while the 30-year yield closed flat at 2.86% for the fifth straight session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale ended steady for the second straight session. The 10-year yield and the 30-year yield were flat for the third consecutive session at 1.83% and 2.94%, respectively. The two-year closed unchanged at 0.35% for the 11th session.
Treasuries were weaker Tuesday morning. The benchmark 10-year yield jumped two basis points to 1.98% while the 30-year yield increased three basis points to 3.19%. The two-year was steady at 0.27%.
