The municipal market was slightly firmer Wednesday, following Treasuries, as investors sought a flight-to-quality bid. “I would say we’re up one to three basis points and you’re seeing the calendar build up a little,” a trader in New York said. “I mean we feel great, if you have the right type of block, institutionally, it’s done. Retail is spotty, though you would think it would be better with the equity market just getting crushed like this. But it’s definitely in our favor, we just need some supply.” “The muni market is firm,” a trader in Los Angeles added. “We’re not keeping pace with the Treasury market and on the long end we’re trading real cheap to Treasuries. A lot of people use Treasuries to hedge their positions and this has moved way beyond where anybody ever thought they would be. The last time we saw this type of flight to quality, Long Term Capital Management hit the skids, and it wouldn’t surprise me if something big happened again.” Trades reported by the Municipal Securities Rulemaking Board Wednesday showed some gains. Bonds from an interdealer trade of Westchester County, N.Y., 4s of 2013 yielded 3.41%, down two basis points from where they sold Tuesday. Bonds from an interdealer trade of insured California 5.75s of 2029 yielded 3.25%, down two basis points from where they traded Tuesday. Bonds from an interdealer trade of New York City 5s of 2016 yielded 3.99%, down two basis points from where they sold Tuesday. The Treasury market showed gains Wednesday. The yield on the benchmark 10-year Treasury note, which opened at 4.09%, was quoted near the end of the session at 4.01%. The yield on the two-year note closed at 3.01% after opening at 3.20%. In economic data released Wednesday, initial jobless claims for the week ended Nov. 17 came in at 330,000 after coming in at a revised 341,000 the previous week. Continuing jobless claims for the week ended Nov. 10 came in at 2.566 million, after 2.559 million the prior week. Economists polled by IFR Markets had predicted 330,00 initial claims and 2.577 million continuing claims. Also, the October composite index of leading economic indicators fell 0.5%, after a 0.1% gain the previous month. The final November University of Michigan consumer sentiment index came in at 76.1 after an initial November reading of 75. Economists polled by IFR had predicted a 0.3% drop in LEI, and a 75.0 Michigan sentiment reading. This week, a full slate of economic news will be released as market participants return from the holiday. Tomorrow, the November consumer confidence index will be released followed by Wednesday’s release of the October durable goods report, both including and excluding transportation, and October existing home sales. Thursday, the preliminary gross domestic product for the third quarter will be released, followed by initial jobless claims for the week ended Nov. 24, continuing jobless claims for the week ended Nov. 17, and October new home sales. Friday, October personal income and consumption, the October core personal consumption expenditures deflator, the November Chicago purchasing managers’ index, and October construction spending will be released. Economists polled by IFR are predicting a level of 90.5 for the consumer confidence index, a 0.3% rise in durable goods orders, a 0.4% gain in durable goods excluding autos, 4.95 million existing home sales, a reading of 4.5% for preliminary GDP, 0.8% for the GDP price index, 330,000 initial claims, 2.600 million continuing claims, and 753,000 new home sales. In addition, IFR economists are expecting a 0.4% level for personal income, 0.1% for the PCE, 1.8% for the core PCE deflator, a reading of 49.7 for the Chicago PMI index, and a drop of 0.3% in construction spending. Activity in the new-issue market was light Wednesday.
