The municipal market was flat to slightly weaker Thursday amid light to moderate secondary trading activity, with market participants mostly sitting on the sidelines ahead of the upcoming long weekend.
“There doesn’t seem to be too much going on,” a trader in San Francisco said. “It feels a touch weaker, but there isn’t a lot of activity, so I’m not really sure I agree with cutting the scale. I’d say it’s flat, considering the activity, but if you want to say we’re down a basis point, you can probably get away with it.”
Tax-exempts opened September with upticks in yields the first two sessions of the month after doing so just once the entire month of August.
The Municipal Market Data triple-A scale yielded 2.20% in 10 years and 3.29% in 20 years Thursday, following 2.19% and 3.29% Wednesday. The scale yielded 3.69% in 30 years Thursday, following 3.68% Wednesday.
Despite the slight uptick the past two sessions, yields have still dropped to all-time lows in 10-year munis 12 times in the past 19 sessions. Thirty-year tax-exempts set record lows four times in the past 10 sessions, while 20-year munis have established all-time lows five times over the same time period.
The record lows currently stand at 2.17% and 3.67% in 10- and 30-year tax-exempts, both established Aug. 25. The 20-year low of 3.28% was set Tuesday.
Thursday’s triple-A muni scale in 10 years was at 84.3% of comparable Treasuries and 30-year munis were at 99.5%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 110.5% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Thursday. The benchmark 10-year note finished at 2.63% after opening at 2.57%.
The 30-year bond finished at 3.71% after opening at 3.65%. The two-year note finished at 0.51% after opening at 0.50%.
In the new-issue market Thursday, Morgan Stanley priced $73.7 million of student housing revenue bonds for the Pennsylvania Higher Educational Facilities Authority.
The bonds mature from 2013 through 2017 and in 2019 and 2021, with term bonds in 2031 and 2042.
Yields range from 2.31% with a 2.25% coupon in 2013 to 5.30% priced at par in 2042.
The bonds are callable at par in 2020, except for bonds maturing in 2042, which are callable at par in 2012. The credit is rated Baa3 by Moody’s Investors Service and BBB-minus by Standard & Poor’s.
Piper Jaffray & Co. priced $65.7 million of speculative-grade certificates of participation for the Guam Department of Education.
The debt matures in 2015, 2020, 2030, and 2040, with yields ranging from 5.60% with a 5.5% coupon in 2015 to 7.00% with a 6.875% coupon in 2040.
The bonds, which are callable at par in 2020, are rated B by Standard & Poor’s.
Bank of America Merrill Lynch priced $49.3 million of utility system revenue bonds for the Lee County, Fla., Industrial Development Authority.
The bonds mature from 2016 through 2030, with a term bond in 2033. Yields range from 1.89% with a 2.5% coupon in 2016 to 4.18% with a 5% coupon in 2033.
The bonds, which are callable at par in 2020, are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.
Burlington County, N.J., competitively sold $42.0 million of bond anticipation notes to TD Securities with a net interest cost of 0.40%.
The Bans mature in Sept. 2011 with a 1.5% coupon. They were not formally re-offered.
New York’s Smithtown Central School District competitively sold $35 million of tax anticipation notes to Citi with a NIC of 0.38%.
The Tans mature in June 2011 with a 1.5% coupon. They were not formally re-offered.
The Greenville County, S.C., School District competitively sold $34.7 million of GO bonds to JPMorgan, with a NIC of 0.34%.
The bonds mature in June 2011 with a 1% coupon. They were not formally re-offered.
The credit is rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
In economic data released Thursday, initial jobless claims fell for the second week, decreasing 6,000 to 472,000 the week ending Aug. 28.
Continuing claims for the week ending Aug. 21 dipped to 4.456 million — the lowest level since June — from a previous level of 4.479 million.
The decline in U.S. nonfarm productivity in the second quarter was twice as much as originally reported, according to updated figures the Labor Department released Thursday.
Nonfarm productivity fell 1.8%, a revised figure that replaces the 0.9% decline reported in the quarter’s preliminary reading last month.
Unit labor costs were revised upward to reflect a 1.1% gain during the quarter ending June 30, instead of the 0.2% gain reported in preliminary data last month.
U.S. factory orders grew 0.1% in July due to more aircraft orders.
Orders excluding transportation fell 1.5% to post their fourth consecutive decline. Economists expected a 1.2% decline in July factory orders.
Pending home sales in July grew 5.2% to a reading of 79.4 from a revised 2.8% decrease in June.
