NEW YORK — Municipal market investors are looking to the week’s large deals to learn if last week’s sell-off has passed or will continue. Currently, there’s too little activity to properly gauge where prices should be.
Traders will look toward deals from the Chicago Board of Education, the New York Transitional Finance Authority, and the California State Public Works Board to get a temperature of yields, a trader in New Jersey said.
“We need to get some pricings in the market before we can see what the appetite is right now, and how well the market will be supported,” he said. “With the sell-off we’ve had in our market, it seems as though retail is supposed to be paying attention right now.”
Tax-exempt yields are steady through 22 years, according to the Municipal Market Data scale. Beyond that, they are flat to two basis points higher.
After nine straight sessions of firming, the 10-year muni yield rested — or, at least pared back earlier losses on the day. It held on the day at 2.55%, after surging 58 basis points since it sat at a record low on Sept. 23.
The 30-year yield ticked up one basis point to 3.71%. It has increased 27 basis points since mid-September. The two-year yield rose two basis points to 0.43%, and nine basis points on the week.
Treasury yields started out of the gate flat, but they’ve taken to the air since then. The benchmark 10-year Treasury yield has jumped 10 basis points to 2.17%. The 30-year also leapt 10 basis points to 3.11%.
The two-year yield inched up a basis point to 0.31%.
The industry anticipates a drop in volume this week. Roughly $6.93 billion is expected for the week, on the heels $8.23 billion last week.
The bulk of deals this holiday-shortened week are negotiated. The competitive market anticipates a quiet four days.
