Municipal bond traders were coming into work on Wednesday for the last full day of trading in 2015. Thursday's session will end at 2 p.m., New York time, and the market will be closed on Jan. 1, 2016, for the New Year's celebration. Trading will resume on Monday.
Secondary Market
Treasury bonds were narrowly mixed on Wednesday. The yield on the two-year Treasury rose to 1.10% from 1.09% on Tuesday, while the 10-year Treasury yield gained to 2.31% from 2.30% and the 30-year Treasury yield was flat from 3.04%.
Top-quality municipal bonds ended weaker on Tuesday. The yield on the 10-year benchmark muni general obligation rose one basis point to 1.93% from 1.92% on Monday, while the 30-year yield was up two basis points to 2.82% from 2.80%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Tuesday at 83.7% compared with 86.3% on Monday, while the 30-year muni to Treasury ratio stood at 92.7% versus 95.3%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 24,738 trades on Tuesday on volume of $3.09 billion.
Primary Market
The primary market will see another very quiet day, with no bond or note deals on the calendar until next week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $439.1 million to $5.53 billion on Wednesday. The total is comprised of $2.65 billion competitive sales and $2.88 billion of negotiated deals.
Muni Supply Slowed Down
"We had record municipal bond issuance in the first half of 2015," according to John Mousseau, executive vice president at Cumberland Advisors. "With over $217 billion issued -- a 45% increase over last year -- 2015 would have been a record year for issuance -- had the second half of the year been as large as the first."
Mousseau said most of this issuance was to refinance older bonds with 2015 call dates.
"There was great pressure on issuers to refinance this debt, since this year's interest-rate levels would have saved issuers over 1% (100 basis points) on much of the 5%-plus yield debt issued in 2005," he wrote. "The bulk of 2005's issuance was front-loaded into the first part of that year; hence, the call dates on this debt became effective during the first half of the year."
