Short to intermediate-range municipal yields edged higher Wednesday, though tax-exempts were mostly flat on the long end, as the municipal market digested $900 million of new-issue supply from Minnesota.

Traders said tax-exempt yields were higher by three to five basis points inside the 10- to 15-year range, but mostly unchanged out longer.

“I think our string of firmness is pretty much over at this point,” a trader in Los Angeles said. “People were definitely mindful of the big Minnesota deal, and there is more supply to come as the weeks go by. There’s just no way we were going to see yields stay that low with any sort of supply in the market. I would think that we’ll be ticking higher and higher in yield going forward, at least for the next little while.”

The Municipal Market Data triple-A scale yielded 2.32% in 10 years and 3.33% in 20 years Wednesday, following 2.27% and 3.33% Tuesday. The scale yielded 3.72% in 30 years Wednesday, matching Tuesday.

Tax-exempts have now opened September with an uptick in yield in at least one of the three maturities the first five sessions of the month after doing so just once the entire month of August.

Before the recent sell-off, yields dropped to all-time lows in 10-year munis 12 times in the prior 17 sessions.

Also, 30-year tax-exempts set record lows four times in the previous eight sessions, while 20-year munis established all-time lows five times over the same time period.

The record lows currently stand at 2.17% and 3.67% in 10- and 30-year tax-exempts, both established Aug. 25. The 20-year low of 3.28% was set Aug. 31.

“There isn’t a ton of movement, but we’re feeling a bit weaker,” a trader in New York said. “We’re probably down two or three basis points in spots, but it’s quiet. On the long end, it’s probably flat. But the tone is definitely weaker.”

In the new-issue market Wednesday, RBC Capital Markets priced $900.6 million of general obligation bonds for Minnesota in two series.

Bonds from the $681.9 million Series D mature from 2011 through 2024, with yields ranging from 0.44% with a 3% coupon in 2012 to 2.84% with a 5% coupon in 2024.

Bonds maturing in 2011 were not formally re-offered. The bonds are callable at par in 2020.

Bonds from the $218.7 million Series E mature from 2011 through 2024, with yields ranging from 0.44% with a 3% coupon in 2012 to 2.84% with a 5% coupon in 2024.

Bonds maturing in 2011 were not formally re-offered. The bonds are callable at par in 2020.

The credit is rated Aa1 by Moody’s Investors Service, and triple-A by Standard & Poor’s and Fitch Ratings.

Wednesday’s triple-A muni scale in 10 years was at 87.5% of comparable Treasuries and 30-year munis were at 99.7%, according to MMD, while 30-year tax-exempt triple-A GOs were at 111.0% of the comparable London Interbank Offered Rate.

The Treasury market showed losses Wednesday. The benchmark 10-year note finished at 2.66% after opening at 2.59%.

The 30-year bond finished at 3.72% after opening at 3.66%. The two-year note finished at 0.52% after opening at 0.48%.

The Treasury Department auctioned $21 billion of 10-year notes with a 2 5/8% coupon at a 2.67% high yield, a price of 99.61.

The bid-to-cover ratio was 3.21. The Fed banks bought $227.2 million for their own account in exchange for maturing securities.

Elsewhere in the new-issue market Wednesday, Citi priced $147.9 million of power system revenue bonds for the North Carolina Eastern Municipal ­Power Agency.

The bonds mature in 2015, 2016, 2021, and 2023. Yields range from 1.78% with a 3% coupon in 2015 to 3.53% with a 5% coupon in 2023. Callable at par in 2021, they are rated Baa1 by Moody’s and A-minus by both Standard & Poor’s and Fitch.

Morgan Stanley priced $90 million of pollution control revenue refunding bonds for the Pennsylvania Economic Development Financing Authority.

The bonds mature in 2023, yielding 4.00% priced at par. They are callable at par in 2020 and rated A3 by Moody’s and A-minus by Standard & Poor’s.

The University System of Maryland competitively sold $50.6 million of pollution control revenue refunding bonds to Hutchinson, Shockey, Erley & Co. with a true interest cost of 2.26%.

The bonds mature from 2011 through 2023 and were not formally re-offered. They are callable at par in 2021. The credit is rated Aa1 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch.

Though the economic calendar was light Wednesday, some Federal Reserve districts reported that moderate economic growth was tempered by “widespread signs of a deceleration” from mid-July through the end of August in the latest installment of the Fed’s “beige book” of economic activity.

The results of the survey by the 12 regional Fed banks were released Wednesday. Five districts reported modest economic growth and two reported “positive developments.”

The remaining five reported “mixed conditions or a deceleration in economic activity.” Eight Fed banks reported economic expansion in the previous edition of the beige book, released July 28.

In a commentary, Steven Wood, chief economist at Insight Economics, wrote that “this report suggests that the [Federal Open Market Committee] will continue to maintain an extremely low funds rate target for an extended period of time.

“The Fed is clearly more concerned about sustaining and strengthening the incipient economic recovery than about potential future inflationary pressures, especially given the current low level of core inflation,” he wrote.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.