Bids and trades appear light early Monday afternoon. But they've combined to lend the municipal market a degree of solidity as participants await what little forthcoming new issuance approaches and watch Treasury yields decline.
Traders are also trying to gauge where the market will head in the New Year, largely in the absence of indicators.
"It has more life to it
Traders note that more market participants are poking around the few bid-wanteds that have surfaced than are actually biting. Still, there is strength beyond the front end of the yield curve, the trader said.
"Folks that operate in the 10-year space, which seems to be firmer, and further out the curve, I see more interest there from customers," he said. "But it hasn't translated into trades just yet."
Issuers are holding their powder for later in the month. No large deals are expected to arrive Monday, and very few this week.
Potential long-term volume for the week is expected to total $1.79 billion, up from sales of $10.8 million last week. That breaks down into $869.3 million scheduled for negotiated sale and $918.2 million set for auction among competitive deals, market estimates show. Other market analysts, though, predict the calendar will weigh in around $2.5 billion this week.
JPMorgan is expected to price a $240 million deal for the University of Texas permanent university fund bonds, the largest on the negotiated calendar. It is expected to arrive as early as Tuesday. Also, Barclays plans to price $150 million of Massachusetts Development Finance Agency revenue bonds.
On the competitive side of the ledger, the San Francisco Unified School District is scheduled to auction $205 million on Thursday, while the New Jersey Educational Facilities Authority expects to auction $200 million of Princeton University revenue bonds on Wednesday.
Yields on the Municipal Market Data triple-A scale are firmer at various segments on the curve. They're up to two basis points lower from two to six years, and flat to one basis point lower between 12 and 17 years.
The triple-A, tax-exempt 10-year ended Friday's session unchanged at 2.79%. The 30-year finished flat at 4.20%. The two-year yield held at 0.35%.
Yields on the Municipal Market Advisors benchmark triple-A scale on Friday held steady across the curve. The 10-year triple-A yield remained unchanged at 2.79%, the 30-year at 4.41% and the two-year at 0.37%.
Treasury yields are firmer Monday. The 10-year yield has fallen below the 3.00% barrier, dropping four basis points to 2.96%. The 30-year yield has firmed four basis points to 3.89%. The two-year has ticked down one basis point to 0.40%.
