The municipal market ended the week’s trading with another slightly firmer session Friday. Traders said tax-exempt yields in the secondary market were lower by two or three basis points.
“We’re doing a bit better again,” a trader in New York said. “It’s been a few weeks now of pretty much the same story in munis, day in and day out. I’m not sure how much longer we’re going to be able to continue to push yields lower and lower, but we’re still going now, and I think this should carry into next week as well. We’re probably better two, maybe three basis points overall at this point.”
“There isn’t a whole lot going on, but we’re definitely firmer,” a trader in San Francisco said. “We’ve been pretty steadily improving on a daily basis for some time, and we kept it going today. Probably about three basis points or so better on the whole.”
The Treasury market showed some losses Friday. The yield on the benchmark 10-year note, which opened at 3.18%, was quoted near the end of the session at 3.22%. The yield on the two-year note was quoted near the end of the session at 0.89% after opening at 0.86%. The yield on the 30-year bond, which opened at 3.95%, was quoted near the end of the session at 4.00%.
The Municipal Market Data triple-A scale on Friday yielded 2.57% in 10 years and 3.43% in 20 years, matching and extending their record lows, respectively, following yields of 2.57% and 3.44% Thursday, respectively.
As of Thursday’s close, the triple-A muni scale in 10 years was at 80.3% of comparable Treasuries, according to MMD, while 30-year munis were 96.2% of comparable Treasuries. Thirty-year tax-exempt triple-A rated general obligation bonds on Thursday were at 100.0% of the comparable London Interbank Offered Rate.
Trades reported by the Municipal Securities Rulemaking Board Friday showed gains. A dealer sold to a customer taxable New York Build America Bonds, 5.21s of 2031 at 5.12%, down three basis points from where they traded Thursday. Bonds from an interdealer trade of taxable New York Metropolitan Transportation Authority BABs 7.34s of 2039 yielded 5.66%, three basis points lower than where they were sold Thursday. Bonds from an interdealer trade of California 5s of 2038 yielded 5.00%, two basis points lower than where they traded Thursday. Bonds from an interdealer trade of Wake County, N.C., 5s of 2027 yielded 3.53%, one basis point lower than where they traded Thursday.
A dealer sold to a customer Clark County, Nev., BABs 6.881s of 2042 at 6.61%, down two basis points from where they traded Thursday. A dealer sold to a customer Virginia State Housing Development Authority 4.6s of 2033 at 5.05%, one basis point lower than where they traded Thursday. Bonds from an interdealer trade of Jacksonville, Fla., 5s of 2025 yielded 4.10%, four basis points lower than where they traded Thursday. A dealer sold to a customer Michigan Tobacco Settlement Finance Authority 6s of 2048 at 6.98%, down two basis points from where they traded Thursday.
In economic data released Friday, nonfarm payrolls fell 263,000 in September, after a revised 201,000 drop the previous month. Economists polled by Thomson Reuters had predicted 180,000 jobs were lost in September.
The unemployment rate rose slightly to 9.8% in September, from 9.7% the previous month. Economists polled by Thomson had predicted a 9.8% unemployment rate.
New factory orders for manufactured goods unexpectedly declined 0.8% in August. Orders declined for the first time since March. Orders excluding transportation goods rose 0.4% for the month. July factory orders were revised to a 1.4% rise. Economists estimated factory orders would rise 0.7% in September, according to the median estimate from Thomson Reuters.
Activity in the new-issue market was light Friday.
