Tax-exempt municipal bond traders got a boost Tuesday morning as U.S. Treasuries gained after the government announced economic data.
Private payrolls grew 126,000 in September, lower than economist expectations of a jump of 182,000, and the unemployment rate fell to 7.2% from 7.3%, the Bureau of Labor Statistics reported Tuesday. The unemployment dip was largely a result of fewer available workers.
"Some subpar employment numbers came in so it says the economy's not doing too well," a trader in New York said in an interview. "That means more quantitative easing and the feeling that rates will stay low forever."
The market is "feeling a little better," the trader said, saying that rallying U.S. Treasuries were encouraging to traders. Yields on bonds maturing 5-10 years out were down a few basis points, he said.
Treasury yields fell across the curve, with the benchmark 10-year and 30-year yields dropping eight and seven basis points, respectively, to 2.52% and 3.62% from Monday. The 2-year yield slid a basis point to 0.30%, according to data from Reuters.
Citigroup Global markets Inc. priced $450 million of California state general obligation various purpose bonds Tuesday morning. The mandatory put bonds were offered with a 4% coupon maturing in 2026 with a 0.92% yield, or a 4% coupon in 2027 with a 1.33% yield. The bonds are callable at par in 2016 and 2017, respectively.
The commonwealth of Pennsylvania is expected to bring $750 million of general obligation bonds in a competitive deal later this morning.
The Bond Buyer's most recent 30-day visible supply showed $12.4 billion on the way, including $8.253 billion in potential volume this week. That's almost twice as much as the $4.388 billion introduced in the week ended October 18.
Yields on the triple-A Municipal Market Data scale fell as much as four basis points for bonds maturing between 2019 and 2043, and by two basis points for those maturing in 2018.
