The municipal market was firmer Thursday amid moderate secondary trading activity, following strengthening Treasuries.
Traders said tax-exempt yields were lower by three or four basis points.
“We’re seeing some gains again,” a trader in New York said. “Treasuries are better on the economic data and we’re improving in sympathy.”
“There was definitely a positive bias today,” a trader in Los Angeles said. “We could be better as much as five basis points in spots. We’ve been seeing yields creep lower and lower every day this week, and today was no exception.”
The Municipal Market Data triple-A 10-year scale fell six basis points Thursday to 3.18%, the 20-year dropped five basis points to 4.42%, and the scale for 30-year bonds declined four basis points to 4.78%.
In the daily MMD commentary, Randy Smolik wrote “with Presidents Day school vacation week looming for many states in the Northeast, buyers may have pushed to complete programs by today.”
“Dealers reported a broad base of buying that provided the most support in the intermediate range,” he wrote. “A very modest primary calendar scheduled for tax-exempts next week emboldened the confidence to step aggressively to buy bonds today. Also encouraging the bid was a stronger Treasury market that got its push from encouraging data and Fed coupon-buying.”
Thursday’s triple-A muni scale in 10 years was at 89.1% of comparable Treasuries and 30-year munis were at 102.6% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 108.4% of the comparable London Interbank Offered Rate.
Treasuries showed gains Thursday. The benchmark 10-year note was quoted near the end of the session at 3.58% after opening at 3.62%.
The 30-year bond was quoted near the end of the session at 4.67% after opening at 4.69%. The two-year note was quoted near the end of the session at 0.78% after opening at 0.83%.
The Treasury Department Thursday sold $9 billion of inflation-indexed 30-year bonds at a 2.19% yield, an adjusted price of 98.66, with a 2 1/8% coupon. The bid-to-cover ratio was 2.54. Federal Reserve banks bought $494.4 million for their own accounts.
In the new-issue market Thursday, the Maryland Economic Development Corp. competitively sold $40.2 million of revenue refunding bonds to Wells Fargo Securities with a true interest cost of 2.69%.
The bonds mature from 2011 through 2019, with yields ranging from 1.26% with a 5% coupon in 2013 to 3.39% with a 3.25% coupon in 2019.
Bonds maturing in 2011 and 2012 were not formally re-offered.
The bonds, which are not callable, are rated A2 by Moody’s Investors Service.
Morgan Keegan & Co. priced $32.7 million of airport revenue refunding bonds for Boise City, Idaho, subject to the alternative minimum tax.
The bonds mature from 2011 through 2020, with yields ranging from 2.26% with a 4% coupon in 2013 to 4.80% with a 5.75% coupon in 2020. Bonds maturing in 2011 and 2012 were decided via sealed bid. The bonds are not callable.
Bonds maturing from 2017 through 2020 were backed by Assured Guaranty Municipal Corp.
The remaining bonds were uninsured. The underlying credit is rated A1 by Moody’s and A-plus by Fitch Ratings.
In economic data released Thursday, initial jobless claims increased 25,000 to 410,000 in the week ended Feb. 12, the first increase in three weeks.
Continuing jobless claims increased to 3.911 million for the week ended Feb. 5 from 3.910 million reported for the prior week.
The initial claims for the week ended Feb. 5 were revised slightly higher to 385,000 from 383,000 reported last week, which was the lowest level since July 2008.
Initial claims data has been volatile through the first seven weeks of 2011 as severe winter storms immobilized much of the country.
Claims jumped to 457,000 for the week ending Jan. 22 then dropped to 385,000 in the first week of February.
Economists expected 400,000 initial claims and 3.90 million continuing claims, according to the median estimate from Thomson Reuters.
Consumer prices rose 0.4% in January as food prices increased by the largest amount in 28 months and gasoline prices gained for the seventh straight month.
Core consumer prices, which exclude food and energy costs, increased 0.2% in January, the largest monthly increase since October 2009.
The gain in consumer prices matched a 0.4% increase in December, revised lower from a 0.5% increase reported last month. Core prices rose 0.1% in December.
January energy prices increased 2.1% as gasoline prices increased 3.5%. Food prices rose 0.5% for the month, the largest increase since September 2008. Food eaten at home, as opposed to restaurant meals, rose 0.7% in January, the largest gain since August 2008.
Economists expected prices would increase 0.4% and core prices would rise 0.1%, according to the median estimate from Thomson Reuters. For the 12 months ending in January, consumer prices increased 1.6%.
