Top-rated municipal bond prices were unchanged at mid-session, traders said, as Treasuries reversed course and logged price gains.
Meanwhile, Federal Reserve Chair Janet Yellen told the U.S. Senate Banking Committee the Fed is being patient about deciding on when to raise interest rates.
"Since the July 2014 Monetary Policy Report, there has been important progress toward the FOMC's objective of maximum employment," Yellen said in a prepared text. "However, despite this improvement, too many Americans remain unemployed or underemployed, wage growth is still sluggish, and inflation remains well below our longer-run objective."
Yellen was testifying on the first day of a two-day appearance before Congress to deliver the Fed's semi-annual economic report. She will speak to a House panel on Wednesday.
But while Yellen said the Fed will maintain its patient stance now, this will not always be the case.
"It is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings," Yellen said in prepared testimony. "Instead, the modification should be understood as reflecting the committee's judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting."
Secondary Market
Prices of top-shelf municipal bonds were steady on Tuesday after Yellen's remarks.
The yield on the 10-year benchmark muni general obligation was unchanged from 2.08% on Monday, while the yield on 30-year GO was flat at 2.88%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices turned higher. The yield on the two-year Treasury note dropped to 0.59% on Tuesday from 0.61% on Monday while the 10-year yield declined to 2.03% from 2.06% and the 30-year yield decreased to 2.64% from 2.66%.
On Monday, the 10-year muni to Treasury ratio was calculated at 101.0% versus 97.7% on Friday, while the 30-year muni to Treasury ratio stood at 108.3% compared to 105.4%.
Primary Market
In the negotiated sector, Wells Fargo Securities priced the New York City Transitional Finance Authority's $700.5 million of tax-exempt fixed-rate refunding bonds for retail investors.
The $655.84 million future tax secured tax-exempt subordinate bonds, Fiscal 2015 Series C, were priced to yield from 0.70% with a 4% coupon in 2017 to 3.25% with a 3.25% coupon in 2031; a 2016 maturity was offered as a sealed bid.
The $44.66 million future tax secured tax-exempt subordinate bonds, Fiscal 2015 Series D, were priced to yield from 0.70% in 2017 with a 4% coupon to 2.71% with a 4% coupon in 2027; the 2015 and 2016 maturities were offered as sealed bids.
The bonds, which will be priced for institutions on Wednesday, are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
Two separate offerings from the Clark County School District, Nev., totaling $398.405 million were sold competitively on Tuesday.
Bank of America Merrill Lynch won the school district's $266.640 million Series A limited tax general obligation refunding bonds with a true interest cost of 1.0513%. The bonds were priced to yield from 0.40% with a 5% coupon in 2016 to 1.30% with a 5% coupon in 2019.
Citigroup Global Markets won the $131.765 million Series B limited tax GO refunding bonds with a TIC of 1.5637%. The bonds were priced to yield from 0.40% with a 5% coupon in 2016 to 2% with a 5% coupon in 2022.
Both issues are rated A1 by Moody's and AA-minus by S&P.
Bank of America Merrill Lynch won the Grand Prairie Independent School District, Texas' $130.005 million of unlimited tax refunding bonds with a TIC of 3.2215%. The issue was priced to yield from 0.40% with a 5% coupon in 2016 to 3.37% with a 4% coupon in 2037. The bonds, which are backed by the Permanent School Fund Guarantee Program, are rated triple-A by S&P and Fitch.
Wells Fargo Securities won Mecklenburg County, N.C.'s $100 million of unlimited tax general obligation school bonds, Series 2015A with a TIC of 2.6262%. The bonds were priced to yield from 0.15% with a 5% coupon in 2016 to 3.35% with a 3.25% coupon in 2035. The issue is rated triple-A by Moody's and S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $219.6 million to $13.297 billion on Tuesday. The total is comprised of $3.758 billion competitive sales and $9.539 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,901 trades on Monday on volume of $5.745 billion. Most active on Monday, based on the number of trades, was the Winnebago and Boone Counties, Ill., School District No. 205's 2015 Series B 4s of 2035, which traded 180 times at an average price of 100.816, with an average yield of 3.887%.
