Municipal bonds weakened Tuesday ahead of the Federal Reserve’s monetary policy meeting as new supply headed into the marketplace.

Most analysts expect the Federal Open Market Committee will raise interest rates when its two-day meeting concludes on Wednesday. The Fed is seen hiking the federal funds rate target 25 basis points to a range of 1.75% to 2% with at least one increase and possibly two to follow this year.

Primary market
Raymond James & Associates priced the New York City Municipal Water Finance Authority’s $373.66 million of Fiscal 2018 Series FF water and sewer system second resolution revenue bonds for institutions after holding a one-day retail order period.

The deal is rated Aa1 by Moody’s Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings. The credit carries stable outlooks from all three rating agencies.

JPMorgan Securities is set to price the New York City Housing Development Corp.’s $550.55 million of Series 2018C multi-family housing revenue sustainable neighborhood bonds for institutions after holding a one-day retail order period.

The bonds are rated Aa2 by Moody’s and AA-plus by S&P.

Since 2008, the HDC has issued about $12.7 billion of bonds, with the most issuance occurring in 2014 when it sold $1.93 billion. It sold the least amount bonds in 2011 when it offered $304.7 million.

Jefferies priced the Northside Independent School District, Texas’ $123.68 million of Series 2018 variable-rate unlimited tax school building bonds. The bonds, backed by the Permanent School Fund Guarantee Program are rated triple-A by Moody’s and S&P.

In the competitive arena on Tuesday, Maine sold $102.395 million of Series 2018B general obligation bonds. Wells Fargo Securities won the bonds with a TIC of 2.2969%.

Maine also sold $15.5 million of Series 2018A taxable GOs, which Citigroup won with a TIC of 2.5386%.

The Federal Way School District No. 210, Wash., sold $140.27 million of Series 2018 GOs on Tuesday.

Bank of America Merrill Lynch won the bonds with a TIC of 3.4798%.

Tuesday’s bond sales

New York:
Click here for the institutional water deal

Click here for the retail water deal

Click here for the retail housing deal

Texas:
Click here for the Northside deal

Maine:
Click here for the state tax-exempt sale

Washington:
Click here for the Federal Way sale

Bond Buyer 30-day visible supply at $9.22B
The Bond Buyer's 30-day visible supply calendar increased $725.9 million to $9.22 billion on Tuesday. The total is comprised of $4.13 billion of competitive sales and $5.09 billion of negotiated deals.

Secondary market
Municipal bonds were mostly weaker on Tuesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the three- to eight-year maturities, rose as much as one basis point in the one- and two-year and nine- to 30-year maturities.

High-grade munis were mostly weaker, with yields calculated on MBIS’ AAA scale falling as much as one basis point in the two- to nine-year maturities and rising as much as one basis point in the one-year and 10- to 30-year maturities.

Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed yields rising as much as two basis points in both the 10-year muni general obligation and the 30-year muni GO maturities.

Treasury bonds were little changed as stock prices were almost flat.

On Monday, the 10-year muni-to-Treasury ratio was calculated at 83.3% while the 30-year muni-to-Treasury ratio stood at 96.2%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 35,979 trades on Monday on volume of $8.91 billion.

New York, California and Texas were the states with the most trades, with the Empire State taking 11.97% of the market, Golden State taking 11.596% and the Lone Star State taking 8.097%.

Treasury sells $35B 4-week bills
The Treasury Department Tuesday auctioned $35 billion of four-week bills at a 1.790% high yield, a price of 99.860778. The coupon equivalent was 1.817%. The bid-to-cover ratio was 3.36.

Tenders at the high rate were allotted 24.75%. The median rate was 1.760%. The low rate was 1.750%.

Gary Siegel contributed to this report.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.