NEW YORK — A relatively subdued municipal market has returned to normal volume levels in the secondary early Friday afternoon. This follows heavy volume the secondary saw Thursday, roiling in the fallout of the Fed’s Operation Twist and subsequent plunging Treasury yields.
Still, there’s some buying going on, a trader in Texas said.
“It’s not as strong as yesterday, but by 1 p.m., Eastern time, there’s been about 15,000 trades,” he said. “It’s slowed down. But it’s a Friday. And the market’s run hard, so you would expect that.”
By comparison, the trader added, Thursday’s session saw an MSRB trade count at 44,000 trades, with $20 billion in volume.
Tax-exempt yields were steady across the curve, according to the Municipal Market Data scale.
The 10-year muni yield Thursday dropped 12 basis points to a record low of 1.97%. The 30-year yield plummeted 18 basis points to 3.44%.
The two-year yield stayed at 0.32% for a sixth straight session.
Treasury yields are weaker across the curve as the day’s session crosses noon. This follows some heavy rallying at the intermediate and longer parts of the curve the past couple of sessions.
The benchmark 10-year Treasury yield, after falling 21 basis points over the past two days to its lowest yield in many decades, has risen five basis points to a still almost incomprehensible 1.78%.
The 30-year yield, which plunged 40 basis points over the same period, has risen five basis points to 2.85%. The two-year yield has inched up one basis point to 0.22%.
The market anticipates a slight decrease in new supply for next week, after a substantial increase in issuance this week. Next week, the market expects an estimated $6.83 billion in new supply. This week saw a revised $7.86 billion of volume.
In the negotiated market, Siebert Brandford Shank & Co. priced for retail $752.4 million of New York City general obligation bonds in three series. The institutional order period is expected to occur next Tuesday, following two days of retail sales. The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Yields for the first series, $584.8 million of series D GOs, ranged from 1.42% with coupons of 4.00% and 5.00% in a split maturity in 2017 to 3.90% with a 3.875% coupon in 2037. Credits maturing between 2024 and 2031 are not offered for retail.
Yields for the second series, $30 million of series E GOs, mature in 2023. They are not offered for retail.
Yields for the third series, $137.6 million of series H GOs, ranged from 0.37% with a 3.00% coupon in 2013 to 2.18% with coupons of 3.50%, 4.00%, and 5.00% in multiple maturities in 2020.
