The primary will see only a few larger noteworthy deals hit on Thursday, as most of the week's issuance priced on Tuesday and Wednesday.
Yields on top quality municipal bonds are as much as one basis point higher on some maturities, according to traders.
Secondary Market
Treasury prices were lower on Thursday morning. The two-year Treasury yield rose to 0.95% from 0.93% on Wednesday while the 10-year Treasury yield was higher at 2.25% from 2.18% and the 30-year increased to 2.98% from 2.91%.
An early morning read on the scale indicates that the 10-year and 30-year yields are as much as one basis point higher from Wednesday's closing numbers.
Top-rated municipal bond prices were slightly higher at Wednesday's close. The yield on the 10-year benchmark muni general obligation was one basis point lower to 1.97% from 1.98% on Tuesday, while the 30-year yield was two basis points lower to 2.90% from 2.92%, according to a final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Wednesday at 90.4% from 91.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.8% compared to 100.1%, according to MMD.
Primary Market
On the heels of remarks from Federal Reserve Board Chair Janet Yellen that the economy is "ripe for a Fed interest rate hike," the primary market will see a few more larger deals trickle through with deals from issuers in Florida and Washington state.
While hedging that incoming data will determine whether the Federal Open Market Committee begins the normalization process this month, Federal Reserve Board Chair Janet Yellen suggested Wednesday that she's ready for a rate increase.
"I currently judge that U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market," she told The Economic Club of Washington, D.C., according to prepared text released by the Fed. "Ongoing gains in the labor market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2 percent as the disinflationary effects of declines in energy and import prices wane."
One trend this week has been some deals that were expected to price on Wednesday, priced on Tuesday and some other deals expected to price on Thursday, priced on Wednesday - one reason why the calendar is very light.
"Relative to the MMD AAA scale, we have had 14 consecutive days of bumps rendering lower interest rate which has revitalized the new issue refundings waiting on the sidelines," said, Gary Binkiewicz, senior vice president and head municipal bond analyst, R. Seelaus and Co. "And with this being December, you really have the first two weeks to get your deal done, and bankers tend to be motivated in that it takes approximately two weeks between sale and closing."
Binkiewicz also mentioned fund flows have been positive again for a few weeks and "lastly, December is another reinvestment month as principal matures and interest payments are due on a fair amount of outstanding debt," he said.
Piper Jaffray is expected to price Tahoma, Wash., School District No. 409's $84.665 million of general obligation bonds. The deal is scheduled to mature serially from 2016 to 2038 and is rated Aa3 by Moody's Investors Service.
It was also announced later on Wednesday, that the Florida Department of Environmental Protection will be selling $80.765 million of Florida forever revenue refunding bonds, series 2015 A. The deal is rated Aa3 by Moody's and AA-minus by both Standard and Poor's and Fitch Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $2.48 billion to $7.06 billion on Thursday. The total is comprised of $3.18 billion competitive sales and $3.88 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 46,560 trades on Wednesday on volume of $10.927 million.
Gary Siegel contributed to this report
