NEW YORK – Afternoon trading activity picked up as deals from last week were making headlines in the secondary market.
“Overall, there is more activity going on than a typical Monday,” said a trader in Florida, adding it was tailored around a few specific inquiries.
There is a lot of activity in the Hudson Yard Infrastructure Corp.2017 to 2019 maturities from last week’s, the trader said. Market participants are “rotating into more desired coupons” on that New York deal.
But, the trader added other markets are weak. Both the New York Transitional Finance Authority and Dormitory Authority of the State of New York personal income tax credits are trading wider than usual. “They are definitely on the historically wider side, so New York credits are seeing drifts to wider spreads.”
On the shorter end of the curve, high-grade paper – double-A and higher – was seeing “a good spark of interest,” the trader added.
And New York deals were making the headlines with other traders as well. “Drift in serials beyond the 10 to 11 year range seemed most evident in NY names,” Municipal Market Data analyst Randy Smolik wrote in his afternoon research note.
“Some of the drift was credit spread widening as the muni market grapples over a tax-exempt calendar that is diverse in major issues unlike last week’s supply concentrated on three major deals,” he said. “But we have noticed that high-grade markets in general have only seen spotty support beyond 2022.”
Tax-exempt yields were holding steady in the early parts of the curve and rose slightly in the later maturities, according to the Municipal Market Data scale. Yields were unchanged through 2022 and rose one to two basis points after that.
The benchmark 10-year muni yield held steady at 2.43%. It remained 46 basis points above the record low it held on Sept. 23.
The two-year yield held steady at 0.45% for the eighth consecutive trading session. The 30-year finished Friday at 3.71%, up two basis points.
Midday, Treasury yields were mixed. Yields rose on the two-and 10-year and fell on the longer end of the curve. The benchmark 10-year Treasury yield rose two basis points to 2.24%. The two-year rose one basis point to 0.29%. The 30-year fell one basis point to 3.27%.
In the estimated $7.37 billion new issue market, no big-name deals are hitting the market Monday, and traders are waiting for deals to pick up later this week. Tuesday is expected to see one of the biggest deals of the week as Illinois sells $300 million sales tax refunding debt in the competitive market.
