Munis Both a Bit Firmer and Flat

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The municipal market was generally unchanged yesterday with improvement in spots. Traders said tax-exempt yields were flat to lower by one or two basis points for the third consecutive session.

"We're a little firmer, but still somewhat flat. That's basically been the story of the week, and it's no different today," a trader in New York said. "We're probably flat on the short end, and maybe a basis point or two better everywhere else. There's not a whole lot going on, though."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. A dealer sold to a customer Kentucky Economic Development Authority 5.625s of 2027 at 5.51%, down two basis points from where they traded Wednesday. A dealer sold to a customer New Jersey's Rutgers State University 5s of 2031 at 4.63%, even with where they were sold Wednesday. A dealer bought from a customer New York State Urban Development Corp. 5s of 2036 at 5.05%, down one basis point from where they traded Wednesday. A dealer bought from a customer Louisiana 5s of 2025 at 4.71%, two basis points lower than where they were sold Wednesday.

"High-grades are probably better a basis point or two, but I'm not sure anything else moved at all," a trader in Los Angeles said. "There's a firmer tone for sure, but it's fairly quiet."

The Treasury market mostly showed gains, while posting mild losses on the long end. The yield on the benchmark 10-year note, which opened at 2.79%, was quoted near the end of the session at 2.78%. The yield on the two-year note was quoted near the end of the session at 0.90% after opening at 0.91%. The yield on the 30-year bond, which opened at 3.45%, was quoted near the end of the session at 3.50%.

In the new-issue market yesterday, Merrill Lynch & Co. priced $310 million of certificates of participation for the Miami-Dade County School Board. The bonds mature from 2011 through 2024, with term bonds in 2027 and 2034. Yields range from 2.25% with a 3% coupon in 2011 to 5.60% with a 5.375% coupon in 2034. The bonds, which are callable at par in 2019, are insured by Assured Guaranty Corp. The underlying credit is rated A3 by Moody's Investors Service and A by Standard & Poor's.

JPMorgan priced $252.1 million of revenue bonds for the Texas A&M University System Board of Regents. The bonds mature from 2010 through 2029, with yields ranging from 0.90% with a 4% coupon in 2010 to 4.70% with a 5% coupon in 2029. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's and AA-plus by Standard & Poor's and Fitch Ratings.

Goldman, Sachs & Co. priced $129 million of water and sewer system revenue bonds for Florida's Jacksonville Electric Authority in two series. Bonds from the $45.4 million Series A mature from 2011 through 2029, with term bonds in 2034 and 2039. Yields range from 1.90% with a 3% coupon in 2011 to 5.46% with a 5.375% coupon in 2039. These bonds are callable at par in 2014. Bonds from the $83.5 million Series B mature from 2010 through 2019, with yields ranging from 1.25% with a 3% coupon in 2010 to 3.71% with a 3.625% coupon in 2019. The bonds are not callable, with the exception of Series B bonds maturing in 2019, which are callable at par in 2018. The credit is rated Aa3 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch.

Wachovia Bank NA priced $35 million of certificates of participation for Harnett County, N.C. The debt matures from 2010 through 2029, with yields ranging from 1.50% with a 3% coupon in 2010 to 5.08% with a 5% coupon in 2029. The COPs, which are callable at par in 2019, are insured by Assured Guaranty. The underlying credit is rated A3 by Moody's and A-plus by Standard & Poor's.

Pennsylvania's West Shore School District competitively sold $25 million of general obligation bonds to Morgan Stanley with a true interest cost of 4.04%. The bonds mature from 2010 through 2029, with coupons ranging from 2% in 2010 to 4.5% in 2028. None of the bonds were formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's.

In economic data released yesterday, initial jobless claims for the week ended Feb. 7 declined by 8,000 to 623,000, after a revised 631,000 the previous week. Economists polled by Thomson Reuters had predicted 610,000 initial jobless claims.

Continuing jobless claims rose 11,000 in the week ended Jan. 31 week, reaching a record high level of 4.810 million. The Labor Department said the previous highest level was 4.713 million on Nov. 6, 1982. Economists polled by Thomson Reuters had predicted 4.800 continuing jobless claims.

Retail sales climbed 1.0% in January, while economists polled by Thomson projected a 0.8% decline. Excluding autos, retail sales rose 0.9% in January, while economists polled by Thomson Reuters predicted a 0.5% drop.

Business inventories were down 1.3% and sales levels fell 3.2% in December. Business inventories slid to $1.461 billion following a revised 1.1% decline to $1.480 billion in November. Thomson had projected that business inventories would be off 0.8% in the month.

Today, the preliminary University of Michigan consumer sentiment index will be released. Economists polled by Thomson Reuters are predicting a 61.0 Michigan sentiment reading.

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