NEW YORK – The tax-exempt market showed signs of slowing Friday afternoon as traders started to focus on the heaviest new-issue calendar of the year to date, expected next week.
“It was a busy morning,” a New York trader said. “But it’s dead this afternoon.”
Looking to next week, “traders are getting real nervous and very testy,” he said. “The coming two weeks will set the tone for the rest of the year and everyone's on edge.”
Munis were firmer early Friday afternoon, according to the Municipal Market Data scale. Yields inside eight years were steady while the nine- and 10-year yields each fell one basis point. Yields between the 11-year and 19-year were steady while yields outside 20 years fell up to two basis points.
On Thursday, the two-year yield ended steady at 0.26%, its record low as recorded by MMD on Feb. 16. The 10-year and 30-year yields finished flat at 1.88% and 3.27%, respectively.
Treasuries were stronger Friday. The benchmark 10-year yield fell one basis point to 1.98% while the 30-year yield dropped two basis points to 3.11%. The two-year was steady at 0.31%.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming over the week.
A dealer sold to a customer Golden State Tobacco Securitization Corp. 5.125s of 2047 at 7.79%, 11 basis points lower than where they traded the week prior.
A dealer sold to a customer Arlington County, Va., 5s of 2022 at 1.90%, eight basis points lower than where they traded earlier in the week.
Another dealer sold to a customer California 7.6s of 2040 at 5.27%, six basis points lower than where they traded earlier in the week.
A dealer sold to a customer Ohio’s Buckeye Tobacco Settlement Financing Authority 5.875s of 2030 at 8.48%, two basis points lower than were they traded earlier in the week.
Looking ahead to next week, the tax-exempt market can expect $7.2 billion in new deals, up from this week’s revised $4.1 billion. In negotiated deals, the market can expect $5.3 billion, up from this week’s revised $3.1 billion. On the competitive calendar, $1.9 billion is expected, up from this week’s revised $1.1 billion.
