NEW YORK – Positive news that Greece will receive its second bailout package pushed some investors into riskier assets, forcing Treasuries and munis lower. But not all traders think the Greek drama is over, and many expect munis to stay stronger until a final resolution is reached in Europe.
“The Greece bailout is pretty much all done,” a New York trader said. But everyone still thinks Greece will continue to have troubles, “so there is a flight to quality and a muni rally.”
Munis were steady to slightly weaker, according to the Municipal Market Data scale. Yields inside four years were steady while yields outside five years rose up to two basis points across the curve.
On Friday, the two-year yield was steady at 0.26%, its record low as recorded by MMD on Thursday. The previous record of 0.29% was set Feb. 7. The 10-year yield and the 30-year yield rose to 1.83% and 3.23%, respectively.
Treasuries were weaker Tuesday morning on positive news from Greece. The benchmark 10-year yield rose three basis points to 2.04% while the 30-year yield jumped two basis points to 3.18%. The two-year was steady at 0.30%.
In the primary market, the municipal market can expect $5.2 billion of new issuance, down from last week’s revised $6.3 billion. On the negotiated calendar, $4.1 billion is expected to be priced, down from last week’s revised $5.6 billion. In competitive deals, $1.1 billion is expected, up from last week’s revised $668.1 million.
In the negotiated market Tuesday, Bank of America Merrill Lynch is expected to price $300 million of San Francisco Airport Commission revenue bonds, rated A1 by Moody’s Investors Service and A-plus by Fitch Ratings.
In the competitive market, Boulder, Colo., is expected to auction $49 million of revenue bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.