Munis End Week Flat, With Light Secondary

The municipal market was unchanged Friday amid fairly light secondary trading activity.

“It’s pretty flat,” a trader in New York said. “We’re just sort of winding down the week. There isn’t a whole lot trading and we’re just unchanged.”

“It’s pretty much a quiet Friday,” a trader in Los Angeles said. “We had all the activity surrounding the big [$2.5 billion California general obligation] deal this week, but now we’re just quiet and flat.”

The Treasury market mostly showed gains Friday, though there were mild losses on the short end. The benchmark 10-year note was quoted near the end of the session with a yield of 3.71% after opening at 3.73%.

The yield on the two-year was quoted near the end of the session at 0.97% after opening at 0.95%. The yield on the 30-year bond finished at 4.63% after opening at 4.67%.

The Municipal Market Data triple-A scale yielded 2.80% in 10 years and 3.78% in 20 years Friday, matching Thursday’s levels. The scale yielded 4.15% in 30 years, matching Thursday’s level.

Thursday’s triple-A muni scale in 10 years was at 75.3% of comparable Treasuries and 30-year munis were at 88.9%, according to MMD, while 30-year tax-exempt triple-A GOs were at 93.3% of the comparable London Interbank Offered Rate.

Trades reported by the Municipal Securities Rulemaking Board Friday showed little movement. A dealer sold to a customer taxable California Build America Bonds 7.3s of 2039 at 7.49%, even with where they were sold Thursday. A dealer sold to a customer Long Island Power Authority 5s of 2026 at 3.63%, even with where they were sold Thursday.

A dealer bought from a customer New York Metropolitan Transportation ­Authority 6.67s of 2039 at 6.49%, even with where they were sold Thursday. A dealer sold to a customer Philadelphia School District 5s of 2034 at 4.77%, even with where they were sold Thursday.

In economic data released Friday, retail sales increased 0.3% in February led by strong gains in electronics and appliance sales. Retail sales for January were revised lower to a 0.1% increase.

Excluding motor vehicles and parts, retail sales increased 0.8%, well above economists’ estimates and the largest gain since November. Auto dealers reported a 2.0% drop for the month.

Economists polled by Thomson ­Reuters had expected retail sales to decline 0.2% for the month and for sales excluding autos to increase 0.1%, according to the median estimate.

The University of Michigan’s preliminary March consumer sentiment index reading was 72.5, compared to the final February reading of 73.6. Economists polled by Thomson Reuters had predicted a 73.6 reading for the index.

Activity in the new-issue market was light Friday.

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