The municipal market was unchanged Thursday amid light secondary trading activity on the final full trading day of 2010.
Traders said tax-exempt yields were flat and trading was sparse ahead of Friday's early market close and the coming new year.
"It was painfully quiet," a trader in San Francisco said. "Maybe you could get a little something done early on, but there's been hardly anything going on the last few hours. … We're ready for the new year."
The Municipal Market Data triple-A 10-year scale was flat Thursday at 3.16%, the 20-year scale was unchanged at 4.39%, and the scale for 30-year debt held at 4.68%.
"We're flat," a trader in New York said. "I'm not really seeing a whole lot of activity. We're winding down."
Thursday's triple-A muni scale in 10 years was at 93.2% of comparable Treasuries and 30-year munis were at 105.4%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 111.7% of the comparable London Interbank Offered Rate.
The Treasury market showed little movement Thursday. The benchmark 10-year note finished at 3.36% after also opening at 3.36%. The 30-year bond finished at 4.43% after also opening at 4.43%. The two-year note finished at 0.64% after opening at 0.63%.
In the daily MMD commentary, Randy Smolik wrote: "In past years, we have seen activity perk up in the muni sector as the New Year approaches. We did see some larger blocks exchange hands mid-week but activity tapered off today. Overall, trading appeared mostly steady but still very spotty."
Smolik also wrote that next week's limited primary calendar could "encourage dealers to hold positions into the New Year with nothing major selling competitively and less than a handful of negotiated deals that can potentially be scheduled."
"So when January re-investment gets ramped up, there is only the secondary to provide supply to feed this demand," Smolik wrote.
In economic data released Thursday, initial jobless claims unexpectedly dropped 34,000 to 388,000 on a seasonally adjusted basis for the week ending Dec. 25.
The figure was beneath the 415,000 claims predicted by a median estimate of economists polled by Thomson Reuters, but Labor Department economists said there was no unusual claims activity in any state or group of states to explain the decline.
The decline follows an upwardly revised 422,000 claims figure for the week ending Dec. 18, originally reported as 420,000.
Continuing claims rose 57,000 to 4.128 million for the week ending Dec. 18, higher than the 4.110 million predicted by a median estimate of economists polled by Thomson.
Continuing claims for the week ending Dec. 11 were revised to 4.071 million from an earlier reported 4.064 million.
Pending home sales rose 3.5% to a reading of 92.2 in November from a revised 10.4% jump to 89.3 in October, originally reported as a 10.1% hike to 89.1. Economists polled by Thomson predicted a 2.0% increase.
The Chicago Purchasing Managers' Business Barometer rose to 68.6 in December from 62.5 in November. A reading below 50 signals a slowing economy, while one above 50 suggests expansion. Economists polled by Thomson predicted a 61.0 reading.
MBIA Inc.'s stock rose 14% to $11.81 on news that JPMorgan and Barclays Bank are withdrawing from a lawsuit alleging MBIA's February 2009 restructuring was intentionally fraudulent and a breach of good faith that hurt policyholders. The suit was brought by JPMorgan, Barclays, and 16 other banks.
