NEW YORK — Large deals in the primary are moving well through the muni market heading into the afternoon. Amid a general flight to quality, retail investors have taken an interest in some of the larger deals that have hit the market on Monday.
JPMorgan priced for retail $600 million of Michigan State Building Authority revenue and refunding bonds. It was well-received, said a trader in San Francisco.
“But we see things like Michigan Builders doing well in the retail order period,” he said. “It sounds like there’s some money getting invested there. It’s meeting with good demand.”
Bonds have been popular of late as a general sense of uncertainty has been growing. Investors are watching a debt-ceiling deadline near. They see Italian banks struggle through stress tests in the shadow of the debacle in Greece. And last week’s employment report showed that the unemployment rate isn’t budging.
For munis, which lag any large moves in other markets, yields have felt the effects; muni yields are mostly lower across the curve. They remained steady for maturities through 2013, according to the Municipal Market Data scale. They were flat to two basis points lower for bonds maturing in 2014. Yields for the rest of the curve fell one to four basis points.
The benchmark 10-year muni yield fell three basis points Friday to close out the week at 2.74%. The 30-year yield lost two basis points, falling to 4.37%. The two-year yield ended the week unchanged at 0.42% for the 19th straight session.
Treasury yields headed into Monday afternoon lower. The 10-year yield dropped seven basis points to 2.95%, moving solidly below 3.00%.
The two-year yield slipped three basis points to 0.37%. The 30-year yield declined five basis points to 4.24%.
Healthy new issuance will help the market, traders have said. Muni bonds to be sold this week are expected to total $5.3 billion, against a revised $878.4 million last week. After the holiday-shortened week, new issuance should resemble June’s volume levels once again, when more than $5 billion a week in new product was issued.
