The municipal market was slightly firmer yesterday. Traders said tax-exempt yields were lower by about two or three basis points overall.
"We're definitely better again today, despite the weakness in Treasuries," a trader in New York said. "Business is definitely getting done, and there's a clear firmer tone out there. We're probably better a good two or three basis points right now, maybe four or even five out long. But we're definitely firmer, right across the board."
Trades reported by the Municipal Securities Rulemaking Board showed gains. A dealer sold to a customer insured Washington 5s of 2022 at 3.94%, two basis points lower than where they were sold Monday. Bonds from an interdealer trade of insured New York State Dormitory Authority 5.3s of 2038 yielded 5.53%, down two basis points from where they traded Monday. A dealer bought from a customer Indiana Finance Authority 4.5s of 2027 at 5.13%, one basis point lower than where they traded Monday. A dealer sold to a customer Clark County, Nev., School District 5s of 2026 at 5.15%, one basis point lower than where they were sold Monday.
A dealer sold to a customer California 5.25s of 2029 at par, two basis points lower than where they traded Monday. Bonds from an interdealer trade of Virginia Housing Development Authority 4.6s of 2033 yielded 6.50%, down three basis points from where they were sold Monday. Bonds from an interdealer trade of California Housing Finance Agency 5s of 2028 yielded 6.75%, three basis points lower than where they traded Monday.
"I think the weakness in Treasuries held back munis a little bit today, but we were still better," a trader in Los Angeles said. "There was more firmness as you went further and further out on the curve, but overall you're looking at two or three basis points' improvement on the day."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year note, which opened at 2.72%, was quoted near the end of the session at 2.87%. The yield on the two-year note was quoted near the end of the session at 0.97% after opening at 0.89%. The yield on the 30-year bond, which opened at 3.47%, was quoted near the end of the session at 3.66%.
In the new-issue market yesterday, JPMorgan priced $385 million of new-money and refunding bonds for the Massachusetts Water Resources Authority in two series. Bonds from the $98 million Series A general revenue bonds mature from 2011 through 2016, and from 2026 through 2029, with term bonds in 2034 and 2039. Yields range from 1.33% with a 4% coupon in 2011 to 5.13% with a 5% coupon in 2039. Bonds from the $287 million Series B general revenue refunding bonds mature from 2011 through 2029, with term bonds in 2034 and 2039. Yields range from 1.33% with a 3% coupon in 2010 to 5.13% with a 5% coupon in 2039. All bonds are callable at par in 2019, are rated Aa2 by Moody's Investors Service, AA-plus by Standard & Poor's, and AA by Fitch Ratings.
Morgan Stanley priced $116.7 million of general obligation promissory notes and refunding bonds for Milwaukee in two series. The $97.4 million series of GO promissory notes matures from 2010 through 2019, with yields ranging from 1.38% with a 3% coupon in 2011 to 3.29% with a 5% coupon in 2019. Notes maturing in 2010 will be decided via sealed bid. They are not callable. The $19.4 million series of GO refunding bonds matures from 2020 through 2024, with yields ranging from 3.57% with a 5% coupon in 2020 to 4.43% with a 5% coupon in 2024. The bonds are callable at par in 2019. The credit is rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.
Peoria, Ariz., competitively sold $68.4 million of GOs to Merrill Lynch & Co., with a true interest cost of 3.77%. The bonds mature from 2009 through 2028, with yields ranging from 1.18% with a 3% coupon in 2011 to 4.70% with a 4.5% coupon in 2027. Bonds maturing in 2009, 2010, 2024, 2025, and 2028 were not formally reoffered. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA-plus by Standard & Poor's.
Today, Barclays Capital will price the week's largest deal - $950 million of GOs for the Los Angeles Unified School District.
The deal is structured to mature serially from 2010 to 2024 with term bonds expected in 2029 and 2034, and is rated Aa3 by Moody's and AA-minus by Standard & Poor's.
In economic data released yesterday, pending home sales increased 6.3% to a reading of 87.7 in December from an upwardly revised 82.5 in November. Thomson Reuters' poll of economists had predicted an 82.3 reading.
Later this week, more economic data will be released, culminating Friday, with the release of the January non-farm payrolls report. Today, the January Institute for Supply Management non-manufacturing index will be released. Tomorrow, initial jobless claims for the week ended Jan. 31 will be released, along with continuing jobless claims for the week ended Jan. 24, preliminary fourth quarter non-farm productivity, preliminary fourth quarter unit labor costs, and December factory orders.
Economists polled by Thomson Reuters are predicting that 524,000 jobs were lost in January. They are also predicting a 39.0 ISM reading, 583,000 initial jobless claims, 4.800 million continuing jobless claims, a 1.1% gain in productivity, a 2.9% climb in unit labor costs, a 3.0% drop in factory orders, and a 4.5% decline in factory orders excluding transportation.
