After a flurry of primary deals Wednesday, the tax-exempt market took a breather Thursday morning to digest supply.
Still, traders said there were opportunities to buy cheap bonds given the selloff over the past few days.
"This market is quiet, but even though there's not panic, it's possible to grab a cheap bond here or there," a Chicago trader said.
In the primary market Thursday, Bank of America Merrill Lynch is expected to price for institutions $520.9 million of Los Angeles Department of Water and Power revenue bonds, rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Morgan Stanley should price $197.5 million of Board of Governors of the Colorado State University System enterprise revenue and revenue refunding bonds, rated Aa2 by Moody's and AA-minus by Standard & Poor's.
Goldman, Sachs & Co. is expected to price $177.6 million of Tarrant County Cultural Education Facilities Finance Corp. hospital revenue bonds, rated A1 by Moody's, A by Standard & Poor's, and AA-minus by Fitch.
In the competitive market, Delaware should auction $225 million of triple-A rated GOs.
Nassau County, New York is expected to auction $141.5 million of GOs, rated A2 by Moody's and A-plus by Standard & Poor's.
Municipal bond market scales finished weaker Wednesday.
Yields on the Municipal Market Data triple-A GO scale jumped across the curve. The 10-year yield increased five basis points to 1.90% while the 30-year yield rose four basis points to 2.92%. The two-year was steady at 0.31% for the second session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale ended weaker. The 10-year yield jumped three basis points to 1.90% while the 30-year yield rose four basis points to 3.03%. The two-year closed unchanged at 0.35% for the 17th session.
Treasuries were stronger Thursday morning. The benchmark 10-year yield plunged five basis points to 1.97% while the 30-year yield dropped four basis points to 3.16%. The two-year yield fell one basis point to 0.27%.
In economic news, the January consumer price index was unchanged while the core rate increased 0.3%.
In other economic news, initial jobless claims jumped 20,000 to 362,000 for the week ending Feb. 16, coming in higher than the 352,000 expected by economists.
In further economic news, existing home sales rose 0.4% to a seasonally adjusted 4.92 million-unit rate in January, following a revised 4.90 million rate in December. Sales came in above the 4.90 million rate expected by economists for January.
Also, the Philadelphia Fed Index slumped to negative 12.5 in February versus a negative 5.8 in January, falling well below economists' expectations of a positive 1.0 read for the index.