The municipal market was slightly weaker Friday.
"All the auction-rate stuff is keeping the muni market [weaker]," a trader in Los Angeles said. "I'd say we're weaker again, maybe by two or three basis points overall."
Munis had been moving out of synch with Treasuries for most of the session, as has been the case the past few sessions, due to the tumult in the auction-rate securities sector. Treasuries had experienced gains through most of the session, but faded as the session reached its close.
At the end of the day, the Treasury market exhibited some losses. The yield on the benchmark 10-year Treasury note, which opened at 3.78%, was recently quoted at 3.80%. The yield on the two-year note was quoted recently at 2.03%, after opening at 1.98%.
Trades reported by the Municipal Securities Rulemaking Board, however, showed little movement. Bonds from an interdealer trade of California 5s of 2037 yielded 5.09%, even with where they were sold Thursday. A dealer bought from a customer New York State Dormitory Authority 5s of 2032 at 5.15%, even with where they traded Thursday. A dealer sold to a customer insured Tampa, Fla., 5s of 2028 at 5.18%, even with where they traded Thursday. A dealer sold to a customer Ohio's Buckeye Tobacco Settlement Financing Authority 5.75s of 2034 at 6.10%, even with where they traded Thursday.
The economic calendar was light Friday.
This week, however, some significant economic data will be released. Today, existing home sales for January will be released, following by the January producer price index, PPI core, and February consumer confidence index tomorrow. On Wednesday, durable goods for January will be released, alongside January new home sales. Initial jobless claims for the week ended Feb. 23 and continuing jobless claims for the week ended Feb. 16 will follow on Thursday, along with the preliminary fourth quarter gross domestic product, January personal income, January personal consumption, the January core personal consumption expenditures deflator, and the Chicago purchasing managers index for February. On Friday, the final February University of Michigan consumer sentiment will be released.
Economists polled by IFR Markets are predicting 4.840 million existing home sales, a 0.3% rise in PPI, a 0.2% uptick in PPI core, a 81.3 consumer confidence index, a 3.5% dip in durable goods, a 0.7% drop in durable goods excluding transportation, 600,000 new home sales, a 0.7% increase in GDP, 350,000 initial jobless claims, 2.800 million continuing jobless claims, 0.2% growth in personal income, a 0.2% uptick in personal consumption, 2.2% rise to the core PCE deflator, a 50.0 Chicago PMI reading, and a 70.0 level for the Michigan sentiment index.
Activity in the new-issue market was light Friday.
