Muni-Wise, New Year’s Eve Is a Bust

Municipals were unchanged during Thursday’s abbreviated session, ahead of a full market close Friday in observance of New Year’s Day.

“We’re totally quiet,” a trader in New York said. “It’s New Year’s Eve, there’s hardly anyone here, and it’s an early close. That’s a recipe for nothing happening. We’re just unchanged, waiting to get out of here and go home.”

“It’s flat,” a trader in Los Angeles said. “There’s really nothing going on. I’m not really seeing much trading at all.”

The Treasury market was weaker Thursday. The yield on the benchmark 10-year note opened at 3.79% and was quoted near the end of the session at 3.86%. The yield on the two-year note opened at 1.08% and was quoted near the end of the session at 1.17%. The yield on the 30-year bond was quoted near the end of the session at 4.66% after opening at 4.61%.

As of Wednesday’s close, the triple-A muni scale in 10 years was at 78.4% of comparable Treasuries and 30-year munis were 89.4% of comparable Treasuries, according to Municipal Market Data, while 30-year tax-exempt triple-A rated general obligation bonds were at 92.6% of the comparable London Interbank Offered Rate.

The Municipal Securities Rulemaking Board reported 25,038 trades of 10,264 separate issues for volume of $8.08 billion Wednesday. Most active was California’s Moulton-Nigel Water District 6.9s of 2039, which traded 189 times at a high of 101.000 and a low of 97.877.

In economic data released Thursday, initial jobless claims dropped by 22,000 to 432,000 for the week ending Dec. 26, the lowest number of initial claims reported for any week this year.

Continuing claims dropped by 57,000 to 4.981 million in the week ending Dec. 19 and are at their lowest level since early February. They have steadily dropped from a high of 6.904 million in late June.

Economists had expected 460,000 in initial claims for the week ending Dec. 26, while they had expected 5.110 million in continuing claims for the week ending Dec. 19, according to the median estimate from Thomson Reuters.

Next week, a slate of economic data is set for release, including Friday’s December non-farm payrolls number. Economists polled by Thomson are predicting a loss of 23,000 jobs.

In a report, Guy LeBas, fixed-income strategist at Janney Montgomery Scott LLC, wrote that “the final payrolls result of 2009 is likely to show that the total number of jobs in the domestic economic declined by a total of 4.1 million during the year.”

“That would mark far and away the worst year for payrolls in the history contemporary data collection, with 2008 ranking as a distant second; adjusting for population growth, however, 1945’s job losses exceeded 2009’s by a sizeable margin,” LeBas wrote.

“For December, the question, as always, is whether the increase in holiday employment exceeded or fell below seasonal adjustments. Given mixed expectations for holiday retail activity and the large number of stores that closed their doors in 2009, we tend to believe that seasonal employment will fall somewhat short of the adjustments, leading to a slight disappointment versus consensus in total payrolls numbers.”

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER