Market Post: Munis Silent Ahead of Fed Announcement

The municipal bond market was silent Wednesday morning as traders prepared for the much-anticipated announcement by the Federal Open Market Committee meeting at 2 p.m.

"We had a huge calendar last week and a light one this week, so until the Fed says what they're going to say this afternoon everyone's generally standing still," a trader in New York said in an interview.

The FOMC determines Fed policy and dictates interest rates in the U.S. Participants in the muni market have faced an ongoing threat of the Fed reducing its monthly asset purchase program since it first introduced the idea of tapering in the spring.

Estimates for this week's volume show a lighter offering of new issues, with potential muni bond volume on the week expected to be $2.59 billion, according to data from Ipreo, The Bond Buyer and Thomson Reuters. That's significantly lower than the week before, which saw $10.63 billion of sales.

Yields on the Municipal Market Data triple-A scale Monday were steady throughout the entirety of the curve.

Treasuries slid Wednesday morning, with the benchmark 10-year and 30-year Treasury jumping four basis points to 2.88% and 3.91%, respectively. The two-year yield gained three basis points to 0.35%.

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