Snowy Blanket Helps Flatten Things Out

The municipal market was unchanged Friday amid a snowstorm that blanketed much of the Northeast.

Traders said that while morning trading was no sparser than a normal Friday, by the afternoon secondary market activity had slowed to a crawl.

“There’s just nothing going on anymore,” a trader in Los Angeles said. “There was some bonds trading this morning, but a lot of the New York people have taken off for the day, and it’s just really quiet. We’re just flat.”

“There’s perhaps a little bit of a firmer tone, but there’s really not enough trading to move the scale,” a trader in New York said.

“There’s a bit more going on than I thought, given the weather over here,” another New York trader said Friday morning. “People are trying to get [deals] done. There are some people I’ve come across that are trading from home. I get the sense that people are trying to get done what they have to get done in the morning and then they’ll dash off early.”

The Treasury market was slight firmer Friday.

The benchmark 10-year note was quoted near the end of the session with a yield of 3.60% after opening at 3.63%. The yield on the two-year was quoted near the end of the session at 0.80% after opening at 0.82%. The yield on the 30-year bond was quoted near the end of the session at 4.54% after opening at 4.57%.

The Municipal Market Data triple-A scale yielded 2.84% in 10 years and 3.80% in 20 years Friday, following levels of 2.84% and 3.81% Thursday. The scale yielded 4.16% in 30 years Friday, versus 4.17% Thursday.

Thursday’s triple-A muni scale in 10 years was at 77.2% of comparable Treasuries and 30-year munis were at 90.1%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 93.7% of the comparable London Interbank Offered Rate.

In economic data released Friday, gross domestic product increased at a 5.9% annualized rate in the fourth quarter of 2009, surpassing economists’ estimates as well as the 5.7% growth reported in the advance estimate made last month.

Economists polled by Thomson Reuters expected 5.6% GDP growth for the quarter, according to the median estimate.

The University of Michigan’s final February consumer sentiment index reading was 73.6, compared to the preliminary February 73.7 reading, the final January 74.4, and the final December 72.5.

Economists polled by Thomson Reuters had predicted a 74.0 reading for the index.

Existing home sales fell 7.2% in January to a 5.05 million annual rate, exceeding economists’ estimates and marking the second-largest monthly decline on record.

Economists expected 5.5 million existing home sales in January, according to the median estimate from Thomson Reuters.

Finally, the Chicago Purchasing Managers’ Business Barometer rose to 62.6 in February from 61.5 in January.

Activity in the new-issue market was light Friday.

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