The municipal market crept into the week Tuesday morning following a three-day weekend and light trading activity on Friday.
"There's very little out there and it's very quiet, maybe up slightly on the long end because there's nothing going on," one trader in New York said. "I think we could use some supply to be quite honest. Some of these guys on the buy side don't really know what the heck to do with themselves."
Issuance this week is projected to fall below $3 billion to just $2.28 billion, according to data from Ipreo and The Bond Buyer. Thirty-day visible supply last Wednesday touched the lowest point since the New Year.
"The light primary left last week's total MSRB volume at $28.8 billion, well below the average $46 billion of the two prior weeks," Janney Capital Markets said in a report Tuesday. "Almost certainly we are in for another week of tepid volume."
Yields according to Municipal Market Data's AAA scale were steady on the short end Tuesday morning, with bonds maturing from 2018 to 2044 falling as much as one basis point. The benchmark 30-year Treasury yield was 3.68% in the morning, while the 10-year was at 2.72%.
Municipal mutual funds reported $82.1 million of net inflows in the week ended Feb. 12, bouncing back from a $227.3 million outflow the week before, Lipper FMI reported Thursday.
"I think equities ran down so much that some people are just taking that off the table and looking at munis," the New York-based trader said.
The Puerto Rico Government Development Bank will host an investor conference call Tuesday afternoon that will likely discuss the commonwealth's upcoming bond issue. The call will be a focal point for the market Tuesday, participants agreed.
