Investors predict the strong tone of the municipal market will continue into the shortened Fourth of July holiday week amid light trading activity.
According to the Janney Daily Fixed Income Strategy report, supply is predictably weak going into a holiday week.
"With the 4th of July holiday coming up, it is likely many buy-side decision makers will be exercising their American right to pursue happiness, especially considering the early close on Thursday July 3rd," Janney reported.
Munis were steady across the board on Monday, according to the Municipal Market Data's triple-A scale.
Demand for munis still remains strong with inflows for all municipal bond funds rising to $233.5 million for the week ending July 18, from $147.7 million the week before, according to Lipper FMI.
"There's always a tug of war going on with people looking for bonds and there being a lack of supply," a New York trader said.
The $333 million Dallas Independent School District's unlimited tax refunding bonds JPMorgan is expected to price this week stand out to investors.
The bonds are appealing because they are a Texas credit and education bonds, market participants said.
"From a credit standpoint, Texas school district deals will get attention," a trader in Dallas said.
The bonds earned a Aa1 rating from Moody's Investors Service.
"[Texas bonds are] one of the better values in the market at any given time. I would have no problems putting [Texas] credit in any client's portfolio."
The trader in Dallas also mentioned that the market and Texas retail investors like to buy education bonds because they feel the bonds serve more of a purpose than straight Texas GOs.
Houston will bring $101.2 million of Higher Education Finance Corporate revenue and refunding bonds on Tuesday.
"It's a slow week, but there's a charter school deal in Harmony, Texas," the second New York trader said. "It has the state public school fund backing it up so there could be a little yield there."
Other than the two Texas deals on the negotiated side of the market the Lancaster Port Authority, Oho, is scheduled to issue $321.6 million gas supply revenue refunding bonds next week. RBC Capital Markets will price the deal.
The Los Angeles Department of Water and Power will market $200 million of revenue bonds on Tuesday.
"There are water and power bonds coming from L.A. that may present an opportunity for yield," a second New York trader said.
For competitive issuance Alabama Public School Authority will auction $555 million capital improvement refunding bonds this week; the bonds received a Aa1 rating from Moody's, a AA from S&P and a AA-plus from Fitch.
Treasuries mostly strengthened Monday, with the 30-year yield falling two basis points to 3.35% and the 10-year benchmark slipping one basis point to 2.53%. The two-year note was unchanged at 0.47% from Friday's market close.
