The tax-exempt market was much stronger Monday morning, following last week's impressive gains, as a risk-off trade pushed Treasuries and other fixed-income markets much higher.
Munis were stronger Monday morning, according to the Municipal Market Data scale. Yields inside nine years were steady while the 10-year yield fell one basis point. Outside 11 years, yields fell as much as three basis points.
On Friday, the 10-year closed at 1.74%, hovering seven basis points above its record low of 1.67% set Jan. 18. The 30-year yield finished at a record low of 2.96%, beating the previous record low of 3.02% set on Wednesday. The two-year was steady at 0.32% for the 30th consecutive session.
Treasuries neared record lows on Monday. The benchmark 10-year yield dropped four basis points to 1.45% while the 30-year yield plummeted five basis points to 2.53%. The two-year plunged three basis points to 0.23%.
In the primary market this week, $8.2 billion is expected to be priced, up from last week's revised $6.9 billion. On the negotiated calendar, $5.8 billion is expected to come to market, up from last week's revised $5.3 billion. In competitive deals, $2.4 billion is expected to be auctioned, up from last week's revised $1.6 billion.
On the competitive calendar, King County, Wash., is expected to auction $100.9 million of triple-A rated general obligation bonds.
In economic news, retail sales fell 0.5% to $401.5 billion in June after falling 0.2% in May. The June drop failed to meet economists' expectations of a 0.2% increase. This is the third consecutive monthly decline in overall retail sales, the longest streak since sales dropped each month between July and December 2008.
"Although the weakness in nominal spending is overstated by the decline in energy prices, this is nonetheless a weak and disappointing retail sales report," wrote economists at RDQ Economics. "Most major categories of retail sales declined over the last three months and those that didn't posted slower gains than seen over the last year. The decline in spending coincides with the downshift in job creation and it is our belief that the outlook for employment is clouded by uncertainties over tax hikes at the beginning of 2013."