The municipal market has begun to firm up Tuesday as investors cotton to the week's new deals.
Tax-exempt yields appear up to two basis points better 10 years on out, a trader in Cincinnati said. Earlier on the curve, yields may have fallen as many as three basis points in spots, he added.
"The municipal market is firm," the trader said. "This week's new deals are going very well. And there seems to be a fair amount of demand for some retail-type structures. It feels like, while Treasuries have had a little bit of volatility, the municipal market has remained pretty steady in the past few sessions here."
The primary market expects to see volume totaling $7.64 billion this week. That compares with a revised $7.44 billion last week.
The number approaches the amount that has been reaching the market over the past couple of weeks. Industry watchers expect the market to absorb the new supply with little difficulty.
Among new deals, JPMorgan won the week's biggest competitive issue, $549.8 million of California various purpose general obligation refunding bonds. The bonds are rated A1 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
Yields ranged from 0.22% and 0.35% with a 2.00% coupon in a split maturity in 2013 to 3.54% with a 3.50% coupon in 2032. The bonds are callable at par in 2022.
On the negotiated side, Wells Fargo is expected to price for retail $381.1 million of Indiana Finance Authority hospital revenue bonds for the Community Health Network Project.
Also, Siebert Brandford Shank & Co. priced $144.7 million of Metropolitan St. Louis Sewer District Wastewater System refunding revenue bonds. The bonds are rated Aa1 by Moody's, AAA by Standard & Poor's and AA-plus by Fitch.
Yields ranged from 0.39% with a 3.00% coupon in 2015 to 2.71% with a 5.00% coupon in 2034. There are no more orders for credits maturing in 2016 through 2024 - except for a split maturity in 2017-as well as for a split maturity in 2031.
Yields were lowered three basis points from Monday's retail order period for debt maturing in 2022. The bonds are callable at par in 2022.
Munis ended Monday unchanged for a third consecutive session, according to the Municipal Market Data scale read. The benchmark 10-year yield held at 1.74%.
The 30-year yield steadied at 2.86%. The two-year remained at 0.30% for the 19th consecutive trading session.
According to one market gauge, muni yields so far Tuesday are stronger after seven years on the curve.
Treasuries yields have been stronger across the curve Tuesday. The benchmark 10-year yield has fallen four basis points to 1.76%.
The 30-year yield has dropped five basis points to 2.91%. The two-year yield has slipped one basis point to 0.30%.