The tax-exempt market showed signs of life in Tuesday morning trading as buyers helped buoy the market. Munis were stronger, following Treasuries.
"There is buying," a New York trader said. "It's a little stronger."
He added the market is "a smidge" higher as it starts to recover from last week's selloff after the Fed announced QE3.
The market is stronger ahead of the first big day in the primary market. Bank of America Merrill Lynch is expected to price for retail $716 million of California's Bay Area Toll Authority revenue bonds, rated Aa3 by Moody's Investors Service, AA by Standard & Poor's and AA-minus by Fitch Ratings. An additional retail order period is expected Wednesday followed by institutional pricing Thursday.
Siebert Brandford Shank & Co. is expected to price for retail $570 million of Connecticut general obligation and GO refunding bonds in three series, rated Aa3 by Moody's and AA by Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency. A second retail order period is expected Wednesday followed by institutional pricing Thursday.
In the competitive market, Nevada's Clark County School District is expected to auction $202.2 million of general obligation limited-tax refunding bonds, rated Aa3 by Moody's, AA-minus by Standard & Poor's, and A-plus by Fitch. The first series will consist of $193.7 million followed by $8.5 million.
On Monday, the 10-year Municipal Market Data yield closed steady at 1.93% while the 30-year yield finished flat at 3.06%. The two-year closed at 0.29% for the 37th consecutive session.
The 10-year MMD yield is now the highest since April 17, when it yielded 1.95%. The 30-year yield is the highest since July 10 when it touched 3.06%.
Treasuries were stronger. The benchmark 10-year yield plummeted five basis points to 1.79% while the 30-year yield dropped four basis points to 2.99%. The two-year yield fell one basis point to 0.26%.