NEW YORK — The municipal market Monday morning picked up right where it left off last week. Little action is expected for the day, a trader in New York said.
The market is revving up for the week with the backdrop of furious activity in Washington concerning the debt-ceiling crisis and budget debate, as well as dramatic movement in Treasury yields. But little in the way of new issuance is expected to be priced today and there are few customer bid-wanteds out, the trader said.
“The secondary seems firm; there’s been a few trades out there,” he said. “It’s another manageable calendar. And right now, it’s nothing like the movement in Treasuries we’ve seen.”
The Municipal Market Data triple-A curve was not updated at press time. On Friday, muni yields were unchanged at the front of the curve. They were one to three basis points lower across the middle and back end of the curve.
Muni yields fell Friday, in spite of an overall lack of trading. While two-year yields were stuck at a calendar-year low of 0.40%, the 10-year yield was driven three basis points lower to 2.67%. The 30-year yield shed two basis points to 4.35%
The debt ceiling and budget crisis instigated a massive rally in Treasuries at the end of last week. This made tax-exempt valuations particularly attractive, leading to falling yields.
After plunging 16 basis points on Friday to its lowest closing yield for 2011, the benchmark 10-year Treasury yield jumped around to start the week, at one point reaching a low of 2.75%, and rising to 2.82%. The two-year Treasury inched up one basis point to 0.37%.
The 30-year yield jumped three basis points in the morning to 4.16, after dropping 13 basis points to end the week.
The market anticipates $3.25 billion in new volume this week, demonstrating that the seemingly endless showdown about raising the federal debt limit won’t bring borrowing to a grinding halt. Though, issuance is expected to be lower than last week’s revised $4.6 billion.
JPMorgan will price one of the largest deals of the week: $900 million expected to be offered in both the negotiated and competitive markets of the New York City Transitional Finance Authority in two series. The first is expected to involve $428.4 million of tax-exempt multi-modal fiscal 2003 Series B bonds, followed by $300 million of fiscal 2012 Series A bonds.
About $172 million of TFA bonds will come to the competitive market Wednesday.
Also on Wednesday, triple-A Montgomery County, Md., will accept bids for $580 million of general obligation bonds. It will issue $320 million Wednesday morning, followed by a $259 million offering.
