NEW YORK — Slight activity in the primary or secondary markets has left municipals feeling a little slack.
While Treasury yields are taking tentative steps back and forth, muni yields are starting to weaken beyond the first five years. As with Wednesday, sellers outnumber buyers, said a trader in Chicago.
“The market’s lethargic,” he said. “If you’ve got to get out of something, you’d have to do it on the bid side; there’s not much going on the offer side. But if you want something you’ve got to pay the price.”
Tax-exempt yields crossing noon once more look to rise on the intermediate to long end of the curve. They are steady through the first five years, according to the Municipal Market Data scale. Beyond that point, they’re up one to three basis points.
The 10-year muni yield jumped nine basis points in Wednesday’s session to 2.18%. It has more than erased the rally gains that brought it to a record low of 1.97% late last week.
The 30-year yield increased three basis points on the day to 3.55%. The two-year yield moved for the first time in 10 sessions. It rose two basis points to 0.34%.
Treasury yields, though, headed into the afternoon mixed. In the past few sessions traders have seen rate increases that reversed the incredible rally at the intermediate and longer parts of the curve last week.
The benchmark 10-year Treasury yield has increased one basis point to 2.00%. The two-year yield has inched up one basis point to 0.27%.
The 30-year yield, which plunged as much as 53 basis points last week, has firmed two basis points to 3.06%.
The market expects new supply this week to have seen a slight decline, following a substantial boost in issuance last week. This week, the market expects an estimated $6.83 billion in new supply. Last week saw a revised $7.86 billion of volume.
By early Thursday afternoon, no major deals have reached either side of the primary market.
