Municipal bond traders Monday said the week's largest deals, set for retail pricing on Monday, will help market participants gauge how much of January's rally has been a result of a lack of issuance.
The municipal market capped a three-week rally Friday that pushed bonds to the strongest start to a year since 2009, with yields on 10-year AAA general obligation bonds falling by 32 basis points. Year-to-date issuance has been $12.8 billion, according to Thomson Reuters data.
"We've come a long way in a short amount of time the past few weeks, I think people need to digest where we are," a trader in New York said. "Last week we kept going lower on yields with light supply and it just kind of fed on itself."
The trader said $360 million of New York City Municipal Water Finance Authority water and sewer bonds scheduled for Monday will be a good way for market participants to determine how much demand is in the market.
The deal, led by Raymond James & Associates, Inc., is rated Aa2 by Moody's Investors Service, and AA-plus by Standard & Poor's and Fitch Ratings.
Also in the negotiated market, RBC Capital Markets is set to price $468 million of Minnesota bonds, which will finance a football stadium for the Minnesota Vikings. The bonds, consisting of $397.7 million tax-exempt and $70.3 million taxable, are rated AA by S&P and Fitch.
Volume this week could reach $4.89 billion, according to Bond Buyer and Ipreo data. Total bond sales last week came to $4.57 billion, according to Reuters.
Yields on some municipal bonds maturing after 2036 rose by one basis point Monday morning, according to Municipal Market Data's AAA scale read. Yields on bonds maturing from 2042 to 2044 rose by as much as two basis points.
Treasuries were mostly unchanged, with the 10-year yield gaining remaining at 2.74% and the 30-year falling one basis point to 3.65%. The two-year was unchanged at 0.35%.
