Trading activity in the tax-exempt market slowed Wednesday afternoon as the 2 p.m. Federal Open Market Committee meeting announcement approached.
Munis were busier in the morning with a weaker tone following a better-than-expected GDP number. While trading slowed, the market still remained weak, traders said.
"The primary calendar wasn't that big today and the secondary has dropped off a little so it's just very lethargic," a New Mexico trader said. "It's a couple basis points off with Treasuries."
In the largest deal of the day, Bank of America Merrill Lynch bought $600 million of Massachusetts general obligation bonds, rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Yields ranged from 2.87% with a 5% coupon in 2023 to 4.70% with a 4.5% coupon in 2043. The bonds are callable at par in 2021.
"It's kind of rich but Massachusetts is always like that," a New York trader said. "The 5% coupons are through the double-A Municipal Market Data scale. Even though it's through the double-A scale, it will sell."
Goldman, Sachs & Co., priced $292 million of Lehigh County Authority water and sewer revenue bonds for the city of Allentown, Pa., rated A by Standard & Poor's.
The bonds yielded 5.13% with a 5% coupon in 2038, 5.23% with a 5% coupon in 2043, and 5.40% with a 5.125% coupon in 2047. The bonds are callable at par in 2023.
Tuesday, yields on the Municipal Market Data scale ended as much as two basis points lower. The 10-year yield slipped two basis points to 2.67% and the 30-year yield fell one basis point to 4.20%. The two-year finished flat at 0.43% for the 10th consecutive session.
Yields on the Municipal Market Advisors scale also ended as much as two basis points lower. The 10-year and 30-year yields fell two basis points each to 2.87% and 4.27%, respectively. The two-year was steady at 0.54% for the fifth session.
Treasuries were weaker Wednesday afternoon though they pared some losses from the morning session. The benchmark 10-year yield rose six basis points to 2.66% and the 30-year yield increased three basis points to 3.70%. The two-year was steady at 0.33%.