The municipal market was flat to one basis point higher Monday morning as traders continue to digest Friday's major headlines and prepare for an estimated $4.46 billion of new volume.
"It's quiet," said one New York trader. "There's not enough trading going on to really call it, and there's no real calendar this week."
He said the sluggishness had little to do with the snowstorm that blanketed the Northeast region.
"It's a typical Monday morning," he said, but hinted that a night of Super Bowl partying could have enhanced the usual malaise more so than the weather.
After three weeks of rallying, municipal bonds finished the month with a soft week as the market remained largely unchanged Friday.
The 30-year benchmark, AAA GO bond closed unchanged on Friday at 3.85%, while the 10-year AAA GO ended down one basis point at 2.53%, according to Municipal Market Data.
Treasury prices rose Monday after manufacturing data showed a greater-than-expected pullback. The Institute for Supply Management manufacturing index fell to 51.3% in January from 56.5% in December, its slowest rate of growth in eight months.
The 10-year note was down 4 basis points at 2.626%, while the 30-year yield fell 4 basis points to 3.582%.
This week's estimated municipal volume is down slightly from a revised $4.97 billion last week, according to Thomson Reuters. Issuance fell 33.4% in January, compared to last year, Thomson reported last week.
Besides a $1 billion Illinois GO deal pricing Thursday, other new issues include a $733.13 million bond anticipation note deal from the Grand Parkway Transportation Corporation in Texas by Goldman, Sachs & Co. on Wednesday.
Last week, Federal Reserve Board Chairman Ben Bernanke's term ended and Monday Janet Yellen was sworn in. In his final meeting as chair, the Fed announced an additional $10 billion reduction of its monthly stimulus.
On Friday, Standard & Poor's Dow Jones Indices said it would remove Puerto Rico bonds from its S&P National AMT-Free Municipal Bond Index, saying the bonds are now trading at high-yield corporate levels.
Looking ahead, the New York trader said news on Friday about efforts by Gov. Alejandro Garcia Padilla to balance Puerto Rico's budget for fiscal 2015 could bolster the market in the weeks ahead of an estimated $2 billion sale -- which could come as early as later this month.
