NEW YORK – It is calm before the storm in muni land Tuesday morning as trading is quiet ahead of several big deals expected to come later in the day.
“It seems quieter today than it has been over the last week,” said a trader in Atlanta. “It’s unchanged and retail has slowed a little with the lower yields we’ve had. There is more interest in longer end of the market.”
He added the $709.3 million the Empire State Development Corp. will sell in two competitive issues will be among the most interesting deals he will look at Tuesday. The deals are rated AAA by Standard & Poor’s.
Munis were mostly steady across the curve, according to the Municipal Market Data scale. There was up to a one basis point increase in yields from the belly of the curve out to the 20-year.
On Monday, the two-year muni yield closed flat at 0.36% for its fourth consecutive trading session. The 10- and 30-year muni yield closed flat for the third consecutive trading session at 1.97% and 3.69%, respectively.
Treasuries were weakening Tuesday morning as yields rose across the curve. The two-year yield rose one basis point to 0.24%. The benchmark 10-year and 30-year yield rose three basis points each to 2.06% and 3.09%, respectively.
In the primary market, Wells Fargo is expected to price $200 million of District of Columbia income tax secured revenue bonds. The credit is rated Aa1 by Moody’s Investors Service, AAA by Standard & Poor’s and AA-plus by Fitch Ratings.
Barclays Capital is expected to price $155 million of Massachusetts State College Building Authority project revenue and refunding revenue bonds. The credit is rated Aa2 by Moody’s and AA by Standard & Poor’s.
Ramirez & Co. is expected to price for institutions $133.9 million of New York State Housing Finance Agency affordable housing revenue bonds.
In economic news, retail sales rose 0.2% in November after increasing a revised 0.6% in October, the Commerce Department said. The increase was lower than expected as economists polled by Thomson Reuters had projected a 0.6% increase.
“The initial print on retail sales for November was below expectations, however, there is nothing here that suggests consumer spending is losing momentum,” wrote analysts at RDQ Economics. “Our favorite gauge of momentum is to compare three-month growth rates to 12-month growth rates and both headline retail sales and the core measure suggest that the trend in retail sales has been picking up.”
