Municipal bond yields were mixed at mid-session, according to traders, as a recent rally in prices slowed slightly.
The muni bond market will see almost $8 billion of new issuance come to market in the upcoming holiday-shortened week. Trading will resume on Tuesday after the Martin Luther King, Jr., holiday on Monday.
Secondary Market
On Friday, municipal bond prices were mixed, traders said, with continued strength seen on the intermediate end.
The yield on the 10-year benchmark general obligation was down as much as two basis points from 1.75% on Thursday, while the yield on 30-year GOs was steady at 2.52%, according to a midday read of Municipal Market Data's triple-A benchmark scale.
Treasury prices were lower on Friday, with the two-year note yield rising to 0.46% from 0.44% on Thursday. The 10-year yield was up to 1.79% from 1.77%, while the 30-year yield rose to 2.43% from 2.41%.
On Thursday, the 10-year muni to Treasury ratio was at 98.9% compared to 96.7% on Wednesday, while the 30-year muni to Treasury ratio was at 104.7% versus 103.5%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,552 trades on Thursday on volume of $12.148 billion. Most active on Thursday, based on the number of trades, was the New York City Transitional Finance Authority's building aid revenue bonds 2015 Series S-1 3 1/8s due 2032, which traded 349 times with an average price of 99.574 and an average yield of 3.157%.
Primary Market
Volume for the week of Jan. 19 is estimated at $7.824 billion, according to Ipreo and The Bond Buyer. Next week's total is up from sales of $5.759 billion this week, according to Thomson Reuters.
Next week's negotiated deals total $5.910 billion versus a revised $4.622 million that were sold this week. Bonds scheduled for competitive sale total $1.915 billion, compared with $1.137 billion this week.
Some of the big deals slated for the week of Jan. 19 include the $1.75 billion offering from the Texas Transportation Commission for the Central Texas Turnpike System, consisting of first and second tier revenue refunding bonds to be priced by Barclays Capital on Thursday; the $508 million Alabama Federal Aid Highway Finance Authority's special obligation revenue bonds to be priced by Morgan Stanley on Wednesday; the $460 million competitive offering from Washington state of various purpose general obligation refunding bonds, going up for bid on Wednesday; and the $460 million Louisiana gas and fuels revenue bonds to be priced on Thursday by Citigroup Global Markets; and the $442 million East Bay Municipal Utility District, Calif., water revenue bonds to be priced by P.P. Morgan Securities on Thursday.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $688.522 billion of inflows in the week ended Jan. 14, after seeing inflows of $1.338 billion in the previous week, according to the latest Lipper data.
The four-week moving average remained positive at $669.041 million in the latest week after remaining in the green at $649.675 million in the prior week. A moving average is an analytical tool used to smooth out price moves by filtering out fluctuations.
Long-term muni bond funds saw inflows of $588.754 million in the latest week, compared to inflows of $821.434 million in the previous week. High-yield muni funds recorded inflows of $259.074 million, after seeing inflows of $336.200 million in the prior week.
Exchange-traded funds had inflows of $128.344 million, after seeing inflows of $158.198 million in the previous week.
Atlantic City May Sell Notes in Q1
Atlantic City, N.J., may reschedule for the first quarter a $40 million note sale that was canceled last year, according to a published report.
The city is looking for underwriters, bond counsel and other staff to work on the deal, City Revenue Director Michael Stinson was quoted as saying by Bloomberg.
The city has until March 31 to repay $40 million it borrowed from the state after it canceled an earlier, trimmed down sale. The city had originally planned a $140 million bond sale for November, then scaled it back to the smaller note sale, which was then delayed and ultimately cancelled because of concerns about the city's finances in the wake of four casino closures.
Stinson told Bloomberg the city also has $12 million in outstanding one-year bond-anticipation notes due on Feb. 1.
