The municipal market was mostly unchanged Friday, with slight firmness on the long end of the curve.
“Overall, we’re pretty flat, but once you get out to like 20 years and longer, we are seeing some gains,” a trader in New York said. “You can maybe pick up one, two, even three basis points on the long end, but inside of like 20 years, there’s virtually no movement. Activity-wise, there isn’t a ton going on, but if you have long paper to move, you can pick up a couple basis points.”
“I’m not seeing too much activity out there today,” a trader in San Francisco said. “It’s pretty quiet out there, in the secondary, but there’s a bit of a firmer tone. Mostly out long, there’s a bit of firmness. Maybe one or two basis points improved out close to 30 years. But short-term stuff, intermediate stuff, that’s pretty flat. I’m not really seeing a whole lot of stuff being traded period, but especially short-term paper. You can basically just call it unchanged today and not be wrong.”
The Treasury market was somewhat mixed Friday. The yield on the benchmark 10-year note, which opened at 3.45%, was quoted near the end of the session at 3.41%. The yield on the two-year note was quoted near the end of the session at 0.97% after opening at 0.94%. The yield on the 30-year bond, which opened at 4.30%, was quoted near the end of the session at 4.24%.
The Municipal Market Data triple-A scale yielded 3.04% in 10 years and 3.73% in 20 years on Friday, following levels of 3.04% and 3.74%, respectively, on Thursday. The scale yielded 4.08% in 30 years, after Thursday’s level of 4.09%.
As of Thursday’s close, the triple-A muni scale in 10 years was at 88.6% of comparable Treasuries, according to MMD, and 30-year munis were 95.6% of comparable Treasuries. Thirty-year tax-exempt triple-A general obligation bonds were at 97.1% of the comparable London Interbank Offered Rate.
Trades reported by the Municipal Securities Rulemaking Board Friday showed some gains. Bonds from an interdealer trade of insured Chicago 5.5s of 2038 yielded 4.34%, down one basis point from where they traded Thursday.
A dealer sold to a customer taxable Washington Build America Bonds 5.48s of 2039 at 5.36%, one basis point lower than where they were sold Thursday. A dealer sold to a customer taxable University of Alabama BABs 6.28s of 2039 at 6.28%, even with where they were traded Thursday.
In economic data released Friday, industrial production grew 0.7% in September, more than three times the median economist estimate, as output in the third quarter turned positive for the first time since the first quarter of 2008. August’s industrial production was revised higher to a 1.2% increase.
Capacity utilization rose to 70.5% from an upwardly revised 69.9% in August. Capacity was initially reported as 69.0% for August.
Economists expected industrial production to rise 0.2% for the month and for capacity utilization to be 69.7%, according to the median estimate from Thomson Reuters.
The University of Michigan’s preliminary October consumer sentiment index reading was 69.4, compared to the final September reading of 73.5. Economists polled by Thomson Reuters had predicted a 73.5 reading for the index.
