NEW YORK – The tax-exempt market is struggling to get going as the primary market is quiet and munis are weakening.
“It’s very difficult to start the engines up,” said a trader in New Jersey. “It’s kind of slow and not much activity. I’d say we’re off three or four basis points on the long end.”
He added traders are “just a little cautious” as the market is off a few basis points overall.
The primary calendar is fairly heavy this week, and the trader said people are gearing up for issuance on Tuesday and Wednesday. “People try to squeeze it in before the end of the year,” he said.
In Monday afternoon trading, munis continued to weakened, according to the Municipal Market Data scale. Yields on the three- to five-year maturities rose one basis point, while yields on the six-year muni increased two basis points. The seven- to 14-year yields increased up to three basis points and the 15- to 19-year yields jumped up to four basis points. Yields beyond the 20-year maturity spiked five basis points.
On Friday, munis finished flat across the curve, unchanged from Wednesday. The two-year muni closed 0.42% for its 17th consecutive trading session. The 10-year finished at 2.21% and the 30-year closed at 3.75%.
Treasuries weakened in the morning, but made small gains in Monday afternoon trading. The two-year yield was down one basis point from this morning to 0.27%. The benchmark 10-year yield was down five basis points from morning, trading at 2.00% and the 30-year yield fell five basis points from morning trading to 2.96%. Treasuries were still weaker than the highs of last week.
In the primary market, approximately $5.89 billion of muni bonds should hit the market this week, up from a revised $1.29 billion last week. About $5.4 billion of negotiated deals are expected along with $489.1 million of competitive bids.
The primary market was quiet Monday as most deals are expected to price Tuesday and Wednesday.
On Tuesday, Goldman, Sachs & Co. is expected to price for retail $500 million Connecticut special tax obligation bonds. The bonds are rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Ramirez & Co. is expected to price for retail $483.9 million of New York’s Metropolitan Transportation Authority transportation revenue bonds. The bonds are rated A2 by Moody’s and A by Standard & Poor’s and Fitch.
