Tax-exempts were mostly unchanged Friday, in light activity, though with a slightly weaker tone."I'm not seeing a whole lot of movement," a trader in New York said. "There might be a bit of a weaker tone still persisting from yesterday, but there's not much activity, and I wouldn't move the scale. I'd call it pretty unchanged."
"It's fairly quiet, not a lot of trading going on," a trader in Los Angeles said. "I'm not seeing much movement, it's pretty flat on the whole, but there is a little bit of weakness in spots. But I'd still say we're flat, maybe just a touch of weakness."
The Treasury market showed gains Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.61%, was quoted near the end of the session at 3.46%. The yield on the two-year note was quoted near the end of the session at 0.93%, after opening at 0.96%. And the yield on the 30-year bond, which opened at 4.49%, was quoted near the end of the session at 4.34%.
As of Thursday's close, the triple-A general obligation scale in 10 years was at 80.7% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 100.2% of comparable Treasuries. Also, as of the close Thursday, 30-year tax-exempt triple-A rated GOs were at 105.6% of the comparable London Interbank Offered Rate.
Activity in the new-issue market was light Friday. However, activity is set to pick up this week, as roughly $7.1 billion of debt is expected in the primary, according to data compiled by The Bond Buyer and Ipreo LLC. Among the largest deals is a $600 million New York Transitional Finance Authority building aid revenue bond deal. The deal is expected to be priced Wednesday by Citi and is structured with serial bonds maturing from 2011 to 2029 and term bonds in 2034 and 2039. The credit is rated A1 by Moody's Investors Service and AA by Standard & Poor's.
In the short-term market, a $1.1 billion one-year tax and revenue anticipation note sale from Los Angeles County is the week's largest deal overall. Merrill Lynch & Co. late last week increased the size of the sale from $900 million. The notes are expected to be rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.
In economic data released Friday, the preliminary first-quarter gross domestic product dropped 5.7%, after a 6.1% decline the previous reading. Economists polled by Thomson Reuters had predicted a 5.5% decrease.
The Chicago purchasing managers' business barometer dropped to 34.9 in May, after a 40.1 reading the previous month. Economists polled by Thomson Reuters had predicted a 42.0 reading.
The final University of Michigan consumer sentiment index came in at 68.7 in May, after a 67.9 reading previously. Economists polled by Thomson Reuters had predicted a 68.0 reading.
