The municipal market crossed noon on Monday with a decidedly weaker tone.
Tax-exempt yields are rising faster than those of Treasuries as traders look to unload inventory or replace losses. Mostly, the market feels unsettled, a trader in Chicago said.
“It’s bleak,” he said. “We need to get through some of these balances that have been left around. The uncertainty that surrounds the market had got people a little bit gun-shy. So, we’re off probably more than we should be.”
The market opened Monday morning with falling prices on munis beyond the front end of the yield curve, traders said.
Volume also should see a predictable “holiday-level” drop. After the glut of new deals over the past couple of weeks, the slowdown might be said to be as appreciated as it is expected.
This week, a total of $2.39 billion is expected, compared with $10.6 billion last week.
This breaks down into $2.08 billion of municipal bond sales scheduled for negotiated sale this week, versus a revised $8.41 billion that were sold last week. Bonds scheduled for competitive sale this week total $309.1 million, compared with $2.18 billion last week.
Frost Bank tentatively priced $94.2 million of Bexar County, Texas, tax-exempt venue project revenue refunding bonds. The bonds are rated A1 by Moody’s A by Standard & Poor’s and A-plus by Fitch Ratings.
Yields range from 0.95% with a 2.00% coupon to 4.07% with a 5.00% coupon in 2049. The bonds are callable at par in 2022.
Later Monday, Jefferies & Co. is expected to hold a retail order period for the week’s largest deal — between $550 million to $850 million of the Metropolitan Transportation Authority’s Triborough Bridge and Tunnel Authority senior and subordinate revenue bonds. Market conditions should determine the size of the deal.
Pricing is set for Tuesday. The credits should arrive structured as serials, term bonds and capital appreciation bonds with a maximum maturity of 2032.
Tax exempt yields Monday continue on their upward trajectory; beyond eight years on the curve, they are up to eight basis points higher, according to one market estimate. The benchmark 10-year yield finished unchanged at 1.66%, Municipal Market Data numbers showed.
The 30-year yield jumped six basis points to 2.71%. The two-year finished steady at 0.30% for the 55th consecutive trading session.
But while muni yields ascend rapidly, Treasuries have been rising at a slower pace. The benchmark 10-year yield has risen three basis points to 1.74%. The 30-year yield has climbed three basis points to 2.90%. The two-year yield has ticked up one basis point to 0.25%.