The municipal market was mostly unchanged Friday amid fairly light secondary trading.
“We’re largely flat,” a trader in New York said. “We’ve been seeing some solid gains for most of this week, but we’re just pretty unchanged. There are some bits and pieces trading, but it’s fairly quiet, not a lot going on.”
“There is a bit of a firmer tone, but it’s flat for the most part,” a trader in Los Angeles said. “You can maybe pick up a basis point here and there.”
The Treasury market showed gains Friday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.56%, after opening at 3.60%. The yield on the two-year note was quoted near the end of the session at 0.77% after opening at 0.81%. The yield on the 30-year bond was quoted near the end of the session at 4.52% after opening at 4.55%.
The Municipal Market Data triple-A scale yielded 2.86% in 10 years and 3.77% in 20 years Friday, after levels of 2.89% and 3.79%, respectively, Thursday. The scale yielded 4.14% in 30 years Friday, matching 4.14% on Thursday.
Thursday’s triple-A muni scale in 10 years was at 79.4% of comparable Treasuries and 30-year munis were 90.4% , according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 95.0% of the comparable London Interbank Offered Rate.
In economic data released Friday, employers shed 20,000 jobs in January, as economists expected payrolls to be nearly flat, or up just a bit, while the unemployment rate decreased to 9.7%, the lowest level since August.
Economists expected employers to add 5,000 jobs in January and for the unemployment rate to increase to 10.1%, according to the median estimate from Thomson Reuters.
Nonfarm payrolls for December were revised lower to a drop of 150,000 from the first-reported 85,000 decline, while in November employers added 64,000 workers, up from a 4,000 gain reported last month.
In a report, Nigel Gault, chief U.S. economist at IHS Global Insight, wrote: “January’s job loss was a disappointment, but the drop in the unemployment rate is encouraging, and the bottom for employment is close at hand.”
“The jobs report suggests that the economy is on the verge of creating jobs, but the improvement is likely to be gradual, suggesting that the welcome drop in the unemployment rate can’t yet be taken as the start of a trend,” Gault wrote. “Jobs are still declining, and the overall loss in jobs during the recession is far worse than first announced.”
“But the trend is much improved and we are now on the verge of creating jobs. Over the past three months, payrolls have fallen an average 35,000, while in the three months to October they fell an average 220,000,” he wrote. “The workweek is rising and temporary jobs are up sharply, usually a precursor to overall employment gains.”
Trades reported by the Municipal Securities Rulemaking Board Friday showed some gains.
A dealer sold to a customer taxable California Build America Bonds 7.55s of 2039 at 7.84%, down two basis points from where they were sold Thursday. Bonds from an interdealer trade of insured Massachusetts 5.5s of 2023 yielded 3.54%, two basis points lower than where they were sold Thursday.
A dealer bought from a customer New York City Transitional Finance Authority 5.5s of 2026 at 1.04%, even with where they traded Thursday.
Bonds from an interdealer trade of insured Oregon’s Medford Hospital Facilities Authority 5s of 2040 at 5.06%, even with where they traded Thursday. A dealer sold to a customer Puerto Rico Sales Tax Financing Corp. 5.5s of 2042 at 5.56%, down one basis point from where they were sold Thursday.
Activity in the new-issue market was light Friday.
