NEW YORK — A somnambulant muni market shuffled into Monday afternoon trying to warm to the week’s coming new deals and other market indicators.
Munis and Treasuries have sloughed off fears and uncertainties blowing in from Europe, as well as the recent lackluster supply of tax-exempt paper. A few trades have surfaced, but no volatility has followed, a trader in California said.
“There have been couple of orders, but that doesn’t mean more are on the way,” she said. “People are searching for new bonds in the secondary.”
At press time, the Municipal Market Data scale had yet to update yields for tax-exempts. They were steady across the curve earlier in the morning.
The benchmark 10-year yield Friday once again reached a record low, as measured by MMD. It ticked down one basis point on the day to 2.07%.
The 30-year yield also inched down a basis point to 3.66%, its lowest level in at least three decades. The two-year yield held fast at 0.30% for a 22nd consecutive session, hovering at its lowest level in more than 40 years.
Treasury yields are mixed heading into Monday afternoon. The 10-year benchmark yield is unchanged at 1.92%, hovering at levels it hasn’t seen in roughly five decades.
The 30-year yield has firmed one basis point to 3.24%. The two-year yield has weakened two basis points to 0.20%.
MMD analyst Randy Smolik wrote that muni trading appeared sluggish, as a mixed market crosses into afternoon.
“Firm bids seemed spotty,” he wrote in a research posting, “yet sellers seemed mostly complacent to sit with inventory even though the market is about to embark on a hefty week of supply...”
Volume in the primary appears to be creeping up from last week’s paltry level. New issuance for this week is expected to be $4.65 billion, not including $5.4 billion of California revenue anticipation notes.
Estimates for last week’s volume were revised downward to $1.95 billion. No new deals of any size have reached the market so far Monday.
