The tax-exempt market opened as much as 10 basis points weaker Monday morning, traders said, though it was definitively better than the 20 basis-point-selloff seen on both Thursday and Friday of last week.
Underwriters in the primary market were not taking any chances in the volatile market and postponed deals. RBC Capital Markets postponed the $129.1 million Pennsylvania Housing Finance Authority single family mortgage revenue bonds deal, rated AA-plus by Standard & Poor's. The deal was expected to price Wednesday.
Citi was expected to price $375 million of triple-A Environmental Facilities Corp. state revolving funds for New York City Municipal Water Finance Authority Monday. The deal was on standby pending market conditions.
Citi was also expected to price $650 million of Louisiana Tobacco bonds Monday. Traders said the deal still appeared to be pricing.
"It doesn't seem as bad as it was last week," a Boston trader said, adding buyers were just starting to show interest in the market again. "When you can sell 5% coupon bonds to retail near par, they come out of their bunkers."
This trader said the market was five to 10 basis points weaker but was very credit-specific. "Some credits are holding in much better than others," he said.
"We don't seem to be getting the panic phone calls today," the trader said. "The initial surge last week was the nervous nelly retail who want to get out instantaneously. Now they are out of the way and we have people who have the benefit of historical knowledge and don't need to completely panic. Some munis are 140% of Treasuries and that's ludicrous. People are starting to poke their heads up."
Friday, on the Municipal Market Data scale ended as much as 18 basis points higher. The 10-year yield jumped 15 basis points to 2.63% and the 30-year yield spiked 18 basis points to 3.96%. The two-year yield increased six basis points to 0.43%.
Yields on the Municipal Market Advisors 5% scale closed as much as 20 basis points higher. The 10-year jumped 18 basis points to 2.78% and the 30-year yield spiked 20 basis points to 4.08%. The two-year yield rose three basis points to 0.50%.
Treasuries continued to head lower Monday morning. The two-year yield rose five basis points to 0.42% and the benchmark 10-year yield jumped 10 basis points to 2.61%. The 30-year yield rose three basis points to 3.60%.