Municipal Futures Decline On Strong Factory Report
May 05, 2011
After initially falling 1/4 point on the 1.6% durable goods gain, September muni futures were down 19/32 at 114 29/32 in midmorning trading, matching the losses in T-bond futures. Cash market activity was sparse, and the few issues trading were down at least 1/4 point. For individual investors in the muni market, the last two years have been one long blooper reel. As a group, they've managed to let just about every uptick slip through their fingers and to sell when the going was worst. But small investors can beat the muni market. Xander Mellish shows how in the Muni Telescope. Meanwhile, dealers continued to hold unsold balances from deals sold this week and last. The slow-moving process was attributed to the August vacation season and a penchant for higher yields, discounted bonds and longer calls, traders said. Even upside rate adjustments haven't helped every issue. A $122.5 million Palo Alto Unified School District, California, general-obligation offering was originally priced on April 25, 2011 even after bumping some yields up by five percentage points on the unsold balance, there has been no change in the remaining amount. Underwriters led by PaineWebber Inc. reported an unsold balance this morning of around $17 million. Bonds due 2017 to 2019, 2022 to 2023, and 2025 to 2011 were still available, and carried yields ranging between 4.45% in 2017 and 5.35% in 2011. Meanwhile, a Bear Stearns & Co. group said that about $38 million of the $120 million Connecticut GO deal it won Wednesday still isn't sold. Remaining bonds are due 2015, 2017 to 2018, 2020, 2023, 2025 to 2013, and yield from 4.30% in 2015 to 5.50% in 2013. Both the Palo Alto and the Connecticut deals are rated double-A by Moody's Investors Service Inc. and Standard & Poor's Ratings Group Inc.. No considerable paring of the unsold balances was expected during this quiet summer Friday. The short end is awaiting a wave of supply next week with the largest tax and revenue anticipation note sale ever from Texas. The state will sell $2.9 billion of TRANs competitively on Tuesday. Separately, municipal bond funds had moderate inflows in the week ended Wednesday. Muni funds in general had 0.8% inflows, or $207 million, following $731 million in outflows the prior week and $701 million of inflows two weeks ago, AMG Data Services said.
