Municipal bonds may get fresh attention if equity markets continue a slump that began this month, traders said.
The Standard & Poor's 500 Index has fallen 4.1% in the past month and the Dow Jones Industrial Average has slipped 6.2%. Struggling equities could spell good news for munis, traders said, even as the S&P and Dow Jones regained some losses Tuesday.
"If stocks keep crashing it may start to sway investors' minds that got out of munis before." One trader in Chicago said. "Municipals don't look so bad if equities keep falling."
The municipal bond market was sluggish Tuesday as traders awaited the week's big issues.
"There's not much to say about the market today," the trader said. "We haven't quite caught up to Treasuries yet."
Yields on municipal bonds were as much as two basis points lower on maturities between 2020 and 2044, according to Municipal Market Data's 5% coupon read.
The municipal market will have a decent amount of new money to work with this week, with issuance hovering around $5 billion, according to Thomson Reuters.
The biggest deal, $1 billion of Illinois general obligation bonds led by Citi, is set to price on Thursday. The deal is part of the state's ongoing $31 billion capital program known as Illinois Jobs Now.
Two major deals are expected to come to market Tuesday, including $733.1 million of Goldman, Sachs & Co.-led Texas Grand Parkway Transportation Corporation toll revenue refunding bond anticipation notes.
Barclays Capital Inc. is expected to hold a retail order period Tuesday for $315 million of University of Massachusetts Building Authority revenue bonds, and RBC Capital Markets is expected to bring $172.1 million of Fort Worth, Texas, water and sewer revenue bonds.
Treasury yields rose Tuesday, as the 10-year benchmark yield climbed five basis points to 2.63%, while the 30-year moved to 3.60%. The two-year yield edged up two basis points to 0.32%.
