Munis steadied across the curve Thursday morning after weakening on Wednesday.
"It's very quiet today; a lot of people waiting on allotments," a trader in New York said. "Things have gotten cheaper -maybe cheaper than they should have. The market is willing to overshoot. There's been a lot of talk how munis have outperformed, but they haven't in the last few days. Price points are cheap enough not to get ahead of itself."
According to the Janney Fixed Income Strategy, a weakening in munis may be a sign of an increasing new issue calendar in the coming months.
The Bond Buyer 30 day visible supply reached it's the highest level of the year thus far at $15 billion.
Some investors believe that the new visible supply amount has caused some weakness in the market this week.
"That's a little bit of what the market is reacting to this week," the New York trader said. "There hasn't been enough institutional buying. There's an imbalance in the market leaning toward the buy side."
Although there seems to be a buyer-issuer disproportion, traders are remaining optimistic about new issuance.
"Where we are in the calendar isn't going to push us back," the New York trader said. "Ultimately it's a good opportunity. It's June, one of the best seasonal periods of the year. I don't think it's going to keep the market back."
The largest long term bond pricing scheduled for this week is a $431.2 million sale of Regional Transportation District of Colorado certificates of participation. JP Morgan Securities is the lead underwriter and the deal is rated Aa3 by Moody's Investors Service, and A by both Standard & Poor's and Fitch Ratings.
Citigroup Global Markets will sell $325 million of Long Beach Harbor revenue short term notes. The deal is rated AA by both S&P and Fitch.
Barclay's Capital will bring $278.5 million of Austin, Texas Water and Wastewater system revenue refunding bonds. The deal is rated Aa2 by Moody's, AA by S&P and AA-minus by Fitch.
Mesirow Financial comes to market with $207 million of Chicago Park District limited tax GOs. The deal received an AA-plus rating from S&P and an AA-minus rating by Fitch.
Bank of America Merrill Lynch will bring $143 million of Los Angeles County Regional Financing Authority mortgage loan insurance. The deal received an A rating from S&P.
Loop Capital Markets will sell $110 million of Chicago, IL., motor fuel tax revenue refunding bonds. The deal is rated Baa1 by Moody's, AA-plus by S&P and BBB-plus by Fitch.
Metro Atlanta Rapid Transit Authority is expected to sell $273.8 million of revenue bonds Thursday, the largest deal in the competitive market. The deal is rated AA-plus by S&P and AA-minus by Fitch.
Kern, County, Calif. will auction $200 million of revenue anticipation notes. The deal is not yet rated.
Treasuries strengthened Thursday morning, with the 10-year benchmark and the two-year note slipping one basis point to 2.60% and 0.39%, respectively. The 30-year yield was unchanged at 3.45% from Wednesday's market close.
