The municipal market has been plagued by a dearth of issuance since late last year year, and there isn't much hope for relief on the horizon.
Issuance next week is projected to fall below $3 billion to just $2.28 billion, according to data from Ipreo and The Bond Buyer. The number breaks down to $1.70 million of negotiated bonds and $586.8 million in competitive deals. Supply was $3.44 million this week.
"The big story in munis is the lack of supply," a trader in New York said in an interview.
The 30-day visible supply Wednesday, at just $4.36 billion, hit its lowest figure since Dec. 31, 2013.
The New York-based trader offered one explanation for the dismal supply outlook, saying cash-strapped citizens aren't enthusiastic about their local governments spending more money and raising their taxes.
"People across the country are voting down these bond referendums right now," the trader said. "The bulk of the volume has been coming from refundings, but as far as new money issues there's nothing. If you have municipalities going through this belt-tightening mode it could be a while before they start issuing new bonds."
Weakening Treasuries this past week didn't do much to budge munis, as yields ultimately remained constant through the week.
"You could have interest rates go higher, munis will get cheaper, but if you still have a supply problem, they won't get as cheap as Treasuries because the lack of supply will keep a damper on rising yields."
Municipal bond yields were steady Friday morning, according to Municipal Market Data's AAA scale.
Treasuries yields were mostly unchanged, with the 30-year moving one basis point higher to 3.70% and the 10-year down one basis point to 2.74%. The two-year yield was unchanged at 0.33%.
