The municipal market was slightly firmer Friday in light trading.
"There hasn't been a lot of activity, but we're better by about two or three basis points," a trader in Los Angeles said. "It's been a firmer week for the most part, and that continued mostly [on Friday]. But it was definitely quiet out there."
"There isn't a whole lot going on," a trader in New York added. "It's a pretty quiet Friday, and a lot of guys are pretty much ready for the weekend."
Trades reported by the Municipal Securities Rulemaking Board showed gains. Bonds from an interdealer trade of Rhode Island Housing 4.85s of 2041 yielded 5.75%, two basis points lower than where they were sold Thursday. A dealer bought from a customer insured New Jersey Economic Development Authority 5.25s of 2031 at 4.60%, three basis points lower than where they traded Thursday. A dealer sold to a customer Port Authority of New York and New Jersey 5.125s of 2030 at 5.11%, down two basis points from where they traded Thursday.
Bonds from an interdealer trade of Arizona's Salt River Project Agricultural Improvement and Power District 5s of 2038 yielded 4.54%, three basis points lower than where they traded Thursday. Bonds from an interdealer trade of Riverside, Calif., 5s of 2033 yielded 4.61%, down one basis point from where they were sold Thursday. A dealer sold to a customer California Health Facilities Financing Authority 5.5s of 2025 at 4.98%, three basis points lower than where they were sold Thursday.
The Treasury market, however, showed mild losses Friday, after showing gains for much of the session. The yield on the benchmark 10-year Treasury note, which opened at 3.81%, finished at 3.85%. The yield on the two-year note was quoted near the end of the session at 2.45% after opening at 2.43%.
In economic data released Friday, housing starts came in at 1.032 million in April after a revised 954,000 the previous month. Economists polled by IFR Markets had predicted 940,000 housing starts.
Building permits came in at 978,000 in April after a revised 932,000 the previous month. Economists polled by IFR had predicted 915,000 building permits.
The University of Michigan's preliminary May consumer sentiment index reading was 59.5, compared to the final April 62.6 reading. Economists polled by IFR had predicted a 62.5 reading for the index.
This week, a slate of economic data will be released, beginning today, with the composite index of leading economic indicators. Tomorrow, the April producer price index and core PPI will be released, followed by initial jobless claims for the week ended May 17 and continuing jobless claims for the week ended May 10 Thursday. On Friday, April existing home sales will be released.
Economists polled by IFR Markets are predicting a 0.1% drop in LEI, a 0.4% rise in PPI, a 0.2% gain to the PPI core, 370,000 initial jobless claims, 3.065 million continuing jobless claims, and 4.850 million existing home sales.
Activity in the new-issue market was light Friday. Heading up the new-issue calendar this week is a $541 million bond sale for the Massachusetts Health and Education Facilities Authority. Citi will price that deal, which contains maturities from 2009 through 2038, Wednesday. The bonds are rated A3 by Moody's Investors Service and BBB-plus by Standard & Poor's.
Also coming up this week, Morgan Stanley tomorrow will price $422 million of bonds for Colorado's E-470 Public Highway Authority, and Pennsylvania will competitively sell $405 million of general obligation bonds Wednesday.
Additionally, Goldman, Sachs & Co. will price $275 million of bonds for Houston Wednesday, San Francisco will competitively sell $275 million of tax-exempt and taxable GO refunding bonds Wednesday in two series, and Merrill Lynch & Co. Thursday will price $200 million of bonds for the New Jersey Educational Facilities Authority.
