Friday, Apr. 10, 2015

Municipal Bond Market
Munis are slightly stronger this morning after trading weaker again yesterday.  Secondary volume continued to be extremely light yesterday with very few secondary offerings and bid wanted situations actually trading.  We should finally see some demand in the secondary today with all of this week’s primary deals priced.  The primary was met with some resistance yesterday as $692mln NYS Dorm-NYU (7/2016-2048) were cut 1-3bps from original levels 30 day supply saw a substantial increase from yesterday with a jump to $12.6bln from $8.6bln.

Muni funds saw outflows for the second straight week with $32mln in redemptions versus $301mln in redemptions last week.  We continue to see buyers sitting on the sidelines due to uncertainty over tax season.  Redemptions mixed with low demand could put some pressure on next week’s primary calendar.

PR benchmarks GOs were unchanged again. Bonds continue to trade in the low $80.00s (10.10%) after trading as high as $86.625 (9.56%) in mid-March. 5000m+ bonds traded yesterday @ $81.50 (10.17%).  We should see benchmark GOs remain in this range until we get more clarity on the pricing of the new deal.

30 Day visible supply: $ 12.6bln

UST 10yr 1.961%