NEW YORK — Weighty Treasuries have dragged municipal bond yields higher to start Tuesday morning’s session.
“Govvies feel heavy,” a trader in New Jersey said. “I guess there’s been good news coming out of Europe. We have a big calendar this week; we’ve got a lot of deals to get through here. We’ll see if the government market influences the buyers here.”
Muni yields have started the day mostly weaker, according to the Municipal Market Data scale. Yields out to five years were not available at press time. Those between six and eight years are flat to three basis points higher. Yields nine years on out are up one to four basis points. The early morning selloff follows two sessions where tax-exempt yields were unchanged.
The benchmark 10-year yield and the 30-year yield closed Monday steady at 1.78% and 3.09%, respectively. The two-year yield remained at 0.31% for the 24th consecutive trading session.
Like their muni brethren, Treasury yields started the day mostly higher. The benchmark 10-year Treasury yield has leapt five basis points to 1.80%.
The 30-year yield, which moved little through Monday’s session, has jumped six basis points to 2.87%. The two-year yield has held at 0.30%.
Traders might view this week as a holiday-shortened one, since an early close is recommended Friday, but the industry expects a decent increase in the primary, nonetheless. Muni volume estimates $9.19 billion will reach the market, compared with $6.83 billion that arrived last week.
There should be quite a bit of money to be put to work this week, because the market is facing huge June and July 1 coupons, the trader said.
“And there are a lot of bonds that are going to be called, either through prerefundings or straight calls; I think I heard something in excess of $40 billion that has to be put to work,” he added. “But let’s see how the new issues go.”
In economic news, the National Association of Realtors announced Tuesday that existing home sales climbed 3.4% in April to a seasonally adjusted 4.62 million-unit rate. This followed a downwardly revised 4.47 million rate in March, originally reported as 4.48 million units.
Economists polled by Thomson Reuters had estimated 4.60 million sales.
The April sales rate represented a 10.0% increase from April 2011. The median sales price increased to $177,400, representing a 10.1% rise from a year ago.
Also, the Johnson Redbook weekly retail sales report on Tuesday calculated that retail sales were 2.7% better in the week ended May 19 than they were over the same period last year. They rose 3.7% in the prior week.
For month-to-date, May has grown 3.0% from May 2011. That’s more than the 2.8% increase expected. But sales slipped 0.9%, compared with April, compared to a 1.1% decline expected.