Munis Unchanged in Light Activity

The municipal market was unchanged to slightly weaker Friday in fairly light trading activity.

“It’s somewhat quiet, but there’s a bit of a weaker tone,” a trader in New York said. “We’re somewhat unchanged on the whole, but there are little pockets of weakness, maybe a basis point or two cheaper here and there.”

“It’s more or less unchanged, but there is some weakness out there,” a trader in Los Angeles said. “It really depends more what you’re trading and where on the curve you’re talking. I mean, we could be cheaper three basis points or so even in spots, but overall, we’re either flat or weaker by a basis point or two.”

The Treasury market showed losses Friday. The yield on the benchmark 10-year note opened at 3.49% and was quoted near the end of the session at 3.55%. The yield on the two-year note opened at 0.77% and was quoted near the end of the session at 0.82%. The yield on the 30-year bond was quoted near the end of the session at 4.51% after opening at 4.50%.

Friday’s Municipal ­Market Data triple-A scale yielded 2.86% in 10 years and 3.63% in 20 years, after levels of 2.82% and 3.61%, respectively, Thursday. The scale yielded 4.12% in 30 years Friday, after Thursday’s level of 4.11%.

As of Thursday’s close, the triple-A muni scale in 10 years was at 81.3% of comparable Treasuries, according to MMD, while 30-year munis were 92.4% of comparable Treasuries. Also, as of Thursday’s close, 30-year tax-exempt triple-A rated general obligation bonds were at 95.6% of the comparable London Interbank Offered Rate.

Trades reported by the Municipal Securities Rulemaking Board Friday showed some losses.

A dealer sold to a customer taxable California Build America Bonds 7.5s of 2034 at 7.67%, two basis points higher than where they traded Thursday.

Bonds from an interdealer trade of insured New Jersey Transportation Trust Fund Authority 5.25s of 2021 yielded 4.08%, up two basis points from where they were sold Thursday.

Bonds from an interdealer trade of ­Hawaii 5s of 2022 yielded 3.38%, three basis points higher than where they were sold Thursday.

In economic data released Friday, retail sales rose 1.3% in November. Excluding autos, sales increased 1.2% for the month, following the category’s 7.1% jump in October. However, economists polled by Thomson Reuters had expected overall retail sales to increase 0.6% in November and for sales excluding autos to increase 0.4%, according to the median estimate.

Import prices increased 1.7% in November. Economists expected a 0.2% increase in import prices, according to the median estimate from Thomson Reuters.

Business inventories increased 0.2% in October. Economists polled by Thomson Reuters expected business inventories to decline 0.3% in October, according to the median estimate. Business inventories declined a revised 0.5% in September.

The University of Michigan’s preliminary December consumer sentiment index reading was 73.4, compared to the final November 67.4 reading. Economists polled by Thomson Reuters had predicted a 68.5 reading for the index.

Activity in the new-issue market was light Friday.

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