Following better-than-expected jobless claims, investors felt confident buying riskier assets and sold safer fixed-income products, pushing the 10-year Treasury yield close to 3.00%.
Thursday morning, munis followed to an extent, but outperformed their taxable counterparts. Muni bond traders said the volume of completed trades was few, limiting price discovery.
“It’s quiet and there are not enough transactions going around so I can see the market being steady,” a New York trader said.
In the primary market, Allegheny County, Pa. was expected to come earlier this week with about $196 million of new money and refunding general obligations bonds and was put on day-to-day status. A banker close to the deal told The Buyer Buyer on Aug. 23 the deal was a “moving target” because of recent interest-rate volatility.
Wednesday, yields on the triple-A Municipal Market Data scale ended flat. The 10-year finished steady at 3.02% and the 30-year was unchanged at 4.49%. The two-year finished flat at 0.43% for the 35th straight session.
Yields on the Municipal Market Advisors scale ended mostly steady. The 10-year and 30-year yields ended unchanged at 3.14% and 4.59%, respectively. The two-year closed unchanged at 0.55% for the 14th session.
Treasuries were much weaker Thursday morning. The benchmark 10-year Treasury yield rose eight basis points to 2.98% and the 30-year yield increased seven basis points to 3.87%. The two-year yield jumped five basis points to 0.51%.
In economic data, jobless claims fell 9,000 to 323,000 for the week ending Aug. 31, falling below the 330,000 expected by economists.
“In our judgment, initial jobless claims are decisively signaling an improvement in job creation and economic growth,” wrote economists at RDQ Economics. “The four-week average of claims has now fallen below 330,000 for the first time since October 2007 and, as a percentage of the labor force, is hovering around the expansion lows of 2006 and 2007, at 0.21%. Even if statistical noise delivers a disappointing payroll gain for August in Friday’s report, the trend in jobless claims should reassure that the underlying conditions in the labor market are improving and that this rate of improvement may be picking up.”
