NEW YORK — Modest trading in the secondary and slightly firming Treasuries are setting the tone for the municipal market early Tuesday afternoon.
Market participants have been content to sit back and wait for the pricing and reception of the week’s issuance, said a trader in Chicago. Also, July coupon money has been put to work selectively, and without much enthusiasm. Bid-wanteds and customer selling have been “insignificant,” he added.
“The Street is apathetic,” he said. “There’s some retail nibbling here and there. You don’t see a lot of trading activity”
Muni yields headed into the afternoon steady across the curve, according to Municipal Market Data scale read. The two-year yield held to end the week at 0.42% for the 15th straight session.
Both the benchmark 10- and 30-year muni yields inched up one basis point to 2.76% and 4.36%, respectively. Each yield has risen 13 basis points in a week.
Treasuries are creating a firm tone, the trader said. Subsequently, the secondary market should remain somewhat firm unless some unusual event risk creates selling pressure.
“Munis had a great quarter,” he said. “Look for spreads to stay relatively tight.”
Treasury yields crossed midday down somewhat. The 10-year yield fell five basis points to 3.15%. The two-year yield slipped three basis points to 0.46%. The 30-year yield also dropped two basis points to 4.38%.
Less issuance is expected for the holiday-shortened week, compared with the previous week. Issuers expect to sell an estimated $1.3 billion of municipal bonds this week, against a revised $8.2 billion that was sold last week.
Last week’s revised number came in higher than the original estimated figure of $5.62 billion. For the year-to-date, the market has averaged more than $3 billion in primary issuance a week.
