NEW YORK – The tax-exempt market started stronger Monday, ending eight consecutive trading sessions of losses. Traders noted that until the Greece situation really gets resolved, the general tone of the market will not change.
“Munis are stronger,” a Chicago trader said. “The calendar has subsided and there are some big names in the market like Illinois and higher-yielding names. It’s much more constructive.”
He added the stronger tone Monday morning “is not a rally, but is slightly more positive which makes sense.”
“We are cheap now. We are 104% of Treasuries in the 10-year so there is a case to be made,” he said.
Munis were stronger Monday morning, according to the Municipal Market Data. Yields inside six years were steady while the seven- to 14-year yields fell up to two basis points. The 15-year to 24-year yields were flat while yields outside 25 years fell one basis point.
On Friday, the two-year yield closed steady at 0.27%, one basis point above its record low. The 10-year yield and the 30-year yield held steady at 2.05% and 3.31%.
Treasuries were stronger Monday morning. The benchmark 10-year yield fell three basis points to 2.01% while the 30-year yield dropped four basis points to 3.15%. The two-year was steady at 0.33%.
In the primary this week, the tax-exempt market can expect $5.81 billion in new issuance, down from last week’s revised $9.36 billion. In negotiated deals, $4.73 billion is expected, down from last week’s revised $7.36 billion. On the competitive calendar, $1.18 billion is expected to come to market, down by almost half from last week’s revised $2 billion.
Bank of America Merrill Lynch is expected to price for retail $120 million of Lee County, Fla., School Board bonds, rated Aa3 by Moody’s and AA-minus by Standard & Poor’s. Institutional pricing is expected Tuesday.