NEW YORK – The tax-exempt market was steady Wednesday morning ahead of what is expected to be the largest day in the primary market this week. Several deals over $1 billion are expected to come to market later this afternoon.“It’s a bit busy,” a New York trader said, adding munis are mostly steady in secondary trading.

This trader added Stockton bonds were not trading lower after declaring bankruptcy late Tuesday evening. “It’s already priced into the market.”

Indeed, munis were steady Wednesday morning, according to the Municipal Market Data scale. On Tuesday, the 10-year yield ended flat at 1.86% for the eighth consecutive trading session while the two-year ended steady at 0.32% for the 18th straight session. The 30-year yield finished flat at 3.16% for the third session.

Treasuries were mostly steady. The benchmark 10-year yield and the 30-year yield were steady at 1.64% and 2.71%. The two-year yield fell one basis point to 0.31%.

 In the primary market, Loop Capital Markets is expected to price the biggest deal of the week – $1.26 billion of City of Los Angeles tax and revenue anticipation notes.

Bank of America Merrill Lynch is expected to price for retail $1 billion of New York’s Metropolitan Transportation Authority bonds, rated A2 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings. Institutional pricing is expected Thursday.

Bank of America Merrill Lynch is also expected to price $524 million of Providence Health and Services bonds, rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch.

Morgan Stanley is expected to price $500 million of Long Island Power Authority Electric System general revenue bonds, consisting of two series of $250 million each.

In the competitive market, the Rhode Island Health and Educational Building Corporation is expected to auction $127.4 million of revenue bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.

In economic news, new orders for manufactured durable goods rose 1.1%, or $2.3 billion, to $217.2 billion in May. The increase came after a 0.2% decrease in April.

The 1.1% rise beat economist expectations who had estimated a 0.4% increase.

“The orders conundrum continues,” wrote economists at RDQ Economics. “On the one hand, the ISM manufacturing new orders data show accelerating orders across manufacturing industries with strong gains over the last three months. On the other hand, this durable goods report shows broad-based softness with a decline in orders over the last three months. The new orders data are volatile but we are not willing to dismiss these data as just the result of volatility. Moreover, the regional manufacturing indicators are pointing to slowing manufacturing activity as has the Fed’s data on industrial production.  Increasingly, therefore, it seems as if the ISM report is the outlier and next Monday’s report, therefore, will be an important one to see if the ISM orders index falls back or holds on to much of its recent gains

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.