NEW YORK – The tax-exempt market was steady Monday morning as traders waited for deals in the primary market to start pricing Tuesday.
Munis were steady Monday morning, according to the Municipal Market Data scale. On Friday, the two-year yield closed flat at 0.31% for the eighth consecutive trading session while the 30-year ended flat at 3.25% for the fifth consecutive trading session. The 10-year yield finished at 1.87% for the third consecutive session.
Treasuries were slightly stronger. The benchmark 10-year yield and the 30-year yield each fell two basis points to 1.92% and 3.10%. The two-year was steady at 0.27%.
In the primary market this week, $6.09 billion in new issuance is expected, down slightly from last week’s revised $6.1 billion. On the negotiated calendar, $5.37 billion is expected, up from last week’s revised $4.19 billion. In competitive offerings, $719.3 million is expected, down from last week’s revised $1.91 billion.
In economic news, personal income rose 0.4%, or $50.3 billion, in March following an upwardly revised 0.3% gain in February.
The increase was better than the 0.3% gain expected by economists.
Personal spending rose 0.3%, or $29.6 billion, in March following an upwardly revised 0.9% gain in February. The increase in March failed to meet the 0.4% gain expected by economists.
“The Fed is likely to be pleased that overall PCE inflation moderated to a year-over-year rate only slightly above its 2% target at the end of the first quarter,” wrote economists at RDQ Economics. “However, note that core PCE prices picked up further to a near three-and-a-half-year high in March, and overall PCE prices have risen at a faster pace of 3.1% annualized over the last three months.
“We expect that overall PCE inflation will only briefly remain at or below the Fed’s 2% target before rising later this year,” the economists added. “Real consumer spending lost a little momentum toward the end of the first quarter, but wages rose at a solid 4.4% annualized pace between December and March and we expect that consumer spending will be continued to be supported by improved hiring and wage growth.”