NEW YORK – The tax-exempt market broke for the Thanksgiving holiday early as activity slowed to a crawl.
“This was a relatively slow week,” said a trader in New York. “There was not much of anything coming to market.” But in the secondary market, bonds are trading “very, very cheap.”
This trader said he found healthcare names that are very cheap as well as some higher education bonds. “Our suspicion is that with new issuance, larger firms are participating in those and in order to raise cash, they are selling secondary holdings.”
“But this is one of the slowest weeks we have seen in the last four,” he said. And looking forward, there are only about three weeks of real trading left before the New Year. “There are three solid weeks left on the calendar and that’s it,” he said. “But with rates as low as they are, there are a bunch of refundings trying to get into the market,” which could make those early December weeks fairly busy.
The Municipal Market Data scale was not updated by press time, but munis were flat in morning trading.
On Tuesday, the two-year muni yield closed flat at 0.42% for its 15th consecutive trading session. The 10-year finished at 2.22% and the 30-year yield closed at 3.75%.
Treasuries were firming in the afternoon, as yields fell across the curve. The two- and 10-year yields were down one basis point each from morning levels to 0.27% and 1.94%. The 30-year yield fell two basis points from morning trading to 2.88%.
The primary market is seeing no action, but the secondary market saw firming.
Bonds from an interdealer trade of Fulton County, Ga., water and sewer revenue 5s of 2023 yielded 2.95%, three basis points lower than where they traded Tuesday.
Bonds from an interdealer trade of New Jersey Transportation Trust Fund Auth 5s of 2042 yielded 2.88%, two basis points lower than where they traded Tuesday.
Bonds from an interdealer trade of California Health Facilities Financing Authority 5s of 2039 yielded 5.10%, two basis points lower than where they traded Monday.
A dealer sold to a customer Georgia 5s of 2023, one basis point lower than where they traded Tuesday.
Bonds from an interdealer trade of Wilson County, Tenn., 5.4s of 2032 yielded 4.67%, one basis point lower than where they traded Tuesday.
