The municipal market was flat to slightly weaker Tuesday, returning from the long Labor Day weekend with a lightly traded session during which yields ticked higher in spots.

Traders said tax-exempt yields were sporadically higher, though the market overall was mostly quiet.

“There was somewhat of a weaker tone out there, but there just wasn’t a whole lot trading,” a trader in Los Angeles said. “It’s a short week coming off the long weekend, and there isn’t a lot of new-issue volume coming this week, so it was fairly quiet. I’d say maybe a basis point or two better in spots, but overall, you could call it unchanged with a weaker tone.”

The Municipal Market Data triple-A scale yielded 2.27% in 10 years and 3.33% in 20 years Tuesday, following 2.25% and 3.33% Friday. The scale yielded 3.72% in 30 years Tuesday, matching 3.72% Friday.

Tax-exempts have now opened September with an uptick in yield in at least one of the three maturities the first four 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 previous 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.

“It was bound to happen,” a trader in New York said. “Yields were down to ridiculous lows, and they quite simply weren’t going to stay there. It’s not really surprising that we’re seeing the market weaken a bit over the past week, and it’s going to continue. I think the most surprising thing to me is that the sell-off hasn’t been more pronounced.”

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.

Tuesday’s triple-A muni scale in 10 years was at 87.0% of comparable Treasuries and 30-year munis were at 101.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 113.4% of the comparable London Interbank Offered Rate.

The Treasury market showed gains Tuesday. The benchmark 10-year note was quoted near the end of the session at 2.60% after opening at 2.70%.

The 30-year bond was quoted near the end of the session at 3.67% after opening at 3.78%.

The two-year note was quoted near the end of the session at 0.50% after opening at 0.51%.

The Treasury Department Tuesday auctioned $33 billion of three-year notes with a 3/4% coupon at a 0.79% yield, a price of 99.88. The bid-to-cover ratio was 3.21. Federal Reserve banks also bought $357.0 million for their own account in exchange for maturing securities.

With much of the market still in vacation mode following Monday’s Labor Day holiday, Minnesota stepped in to issue $900.6 million of general obligation bonds in the only sizable deal expected to arrive this week.

The summer doldrums will continue to curtail issuance in a second straight week of otherwise light trading and underwriting activity.

Ipreo LLC and The Bond Buyer expect an estimated $3.02 billion in new, long-term volume on the heels of a revised $3.59 billion that actually made its way to the primary market last week, according to Thomson Reuters.

RBC Capital Markets Tuesday priced the GO bonds for Minnesota in two series for retail investors.

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 2.83% with a 5% coupon in 2024.

Bonds maturing in 2011 will be decided via sealed bid. The bonds are callable at par in 2020.

Bonds from the $218.7 million Series E mature from 2011 through 2024. Bonds maturing from 2012 through 2024 were not offered during the retail order period. Bonds maturing in 2011 will be decided via sealed bid. The bonds are callable at par in 2020.

The credit is rated Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s and Fitch Ratings.

Elsewhere, a handful of utility and power deals are expected to be priced in the Southeast and the Midwest regions.

The North Carolina Eastern Municipal Power Agency is gearing up to sell $182 million of revenue refunding bonds. Citi is expected to price the deal on Wednesday with a structure that includes all tax-exempt debt maturing serially from 2015 to 2021 and in 2023.

The power bonds are expected to be rated Baa1 by Moody’s and A-minus by Standard & Poor’s and Fitch.

Meanwhile, two Florida utility deals are also on tap. The larger of the pair is $142.8 million of consolidated utility system revenue bonds that will be issued by the state’s capital, Tallahassee.

The deal consists of $110.8 million of federally taxable Build America Bonds in Series 2010A that are structured to mature in 2040, and $32 million of tax-exempt debt structured to mature from 2015 to 2028.

The bonds are rated Aa1 by Moody’s and AA-plus by the two other major rating agencies.

The Orlando Utility Commission will join the activity with its $108 million sale of system revenue refunding bonds to be priced by JPMorgan and structured as serial bonds maturing from 2019 to 2027.

The deal is rated Aa1 by Moody’s and AA by Standard & Poor’s and Fitch.

In the Midwest, nearly $120 million of utility system revenue and refunding bonds is expected from Colorado Springs. The negotiated deal is being priced by Piper Jaffray & Co. on Thursday following a retail order period Wednesday.

The bonds are rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch.

The two-pronged sale consists of $95.22 million of tax-exempt revenue refunding bonds in Series 2010A-1, which are structured to mature serially from 2011 to 2033.

Series 2010 A-2 consists of $22.18 million of taxable, direct-pay BABs structured as improvement revenue bonds that will mature serially from 2016 to 2025 with term bonds in 2030 and 2040.

The economic calendar was light ­Tuesday.

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.