A few municipal bond traders participated in the market Wednesday morning, though activity started to slow ahead of the early 2 p.m. close.
“There are a handful of trades but the market is shutting down for the Fourth,” a Chicago trader said.
No significant deals were expected to price for the remainder of the week and traders looked to next week’s growing calendar. The Bond Buyer 30-day visible supply calendar ticked up to over $14 billion.
Tuesday, yields on the Municipal Market Data scale ended unchanged across the curve. The 10-year and 30-year yields were steady for the fourth session at 2.56% and 3.83%, respectively. The two-year was flat at 0.50% for the fifth session.
Yields on the Municipal Market Advisors scale ended mostly flat as well Tuesday. The 10-year yield rose one basis point to 2.73%. The 30-year yield was unchanged at 3.95% for the third session and the two-year was steady at 0.53% for the fourth session.
Treasuries were flat to slightly weaker Wednesday morning. The benchmark 10-year rose one basis point to 2.48% and the 30-year yield increased two basis points to 2.49%. The two-year was steady at 0.35%.
In economic news, the international trade deficit was $45 billion in May, an increase of 12.1%, or $4.9 billion, from the revised $40.1 billion deficit in April. The May deficit was larger than the $40.1 billion estimated by economists.
“Through the monthly volatility, both exports and imports have risen faster over the last three months than over the last year – with imports outpacing exports,” wrote economists at RDQ Economics. “This is an encouraging sign for global trading volumes and echoes the message of the June ISM report, which showed higher import and export order growth.”
“From a second-quarter GDP perspective, however, the wider trade gap in May points to a ‘drag’ from growth of between half- and three-quarters of a point,” the economists wrote. “This raises the chance that second-quarter real GDP growth will be reported at less than 2% since the factory inventory data through May do not appear to have captured this rise in imports of industrial materials.”
In other economic news, initial jobless claims fell 5,000 to 343,000 for the week of June 29. The claims were better than the 345,000 figure expected by economists.
“The initial jobless claims data continue to give an encouraging signal on the labor market as the four-week average in claims continues its fitful trend downwards,” the RDQ economists said. “At a minimum, these data suggest there has been no increased layoff activity among employers. However, the signal from jobless claims over the next few weeks could be overwhelmed by volatility due to auto shutdowns for retooling. In short, there are a lot of moving parts in next week’s claims data and it may be a few weeks before we begin to get relatively clean jobless readings again.”
