Municipal bond traders are preparing for what is likely to be the biggest slate of new issue volume before the year is done.
“We’re getting close to the end with only another week or so before things really start to shut down, so deals are trying to get through before we hit that wall,” a trader in Connecticut said. “The market appears to be trying to hang on at these levels, but with any appreciable amount of supply, things may pop up quite a bit.”
Any impact of employment data on Friday was muted by Monday morning, he said. The Bureau of Labor Statistics reported payrolls posted gains of 203,000 nonfarm jobs, as well as a positive 8,000 net jobs revision for October. The bureau also reported unemployment of 7.0%, or 0.25 point less than October's number before rounding.
“Looking at where things are today relative to Friday it doesn’t look like it had a lot of impact,” the trader said. “Detroit getting the bankruptcy decision didn’t do too much either, as it appears everyone expected that.”
Total volume for the week is expected to reach $11.33 billion, up from $6.23 billion last week, Ipreo, The Bond Buyer and Thomson Reuters numbers show.
Three issuers are expected to bring deals around $1.6 billion this week. California's Foothill/Eastern Transportation Corridor Agency will bring two deals for more than $2 billion of refunding bonds, the Utility Debt Securitization Authority of New York has two for roughly $2.2 billion and the New York State Thruway Authority is issuing $1.6 billion.
Jefferies LLC is expected to hold a second day retail order period for $700 million of general obligation bonds in two series. The bonds, which are expected for institutional pricing Tuesday, were rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
Treasuries started Monday firmer, with the benchmark 10-year yield down three basis points to 2.84%, the 30-year down four basis points to 3.87% and the two-year yield down a basis point to 0.30%.