New York's Metropolitan Transportation Authority priced Thursday morning, wrapping up a list of large deals this week that have been relatively well received.
"The MTA deal just got into the market so we won't know for an hour or so just how things are going with that but there is a firmer tone in the morning," a New York trader said.
Barclays priced for institutions $500 million of New York's Metropolitan Transportation Authority transportation revenue bonds, rated A2 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings. Pricing details were not yet available.
Outside the last major deals to hit the market, the overall tone for deals this week was strong. "The New Jersey Turnpike Authority deal was done well and since yesterday we've seen those issues actually be able to improve pricing and we're seeing good flow in that today. That's a good sign and we're seeing a firm, steady tone today."
And after weeks of posting losses, traders said the rally this week was driven from abroad. "Cyprus is the biggest driver because nothing has changed in our markets," the trader added. "There is money there in funds and some larger institutions but there is a concern that rates are going to creep up so people have been gun shy. And with the large amount of supply there should have been adjustments in prices."
But, firmer Treasuries are keeping the market strong. "Firmer Treasuries this morning is helping," he said. "And that makes ratios between munis and Treasuries more attractive. Some are now over 100% and particularly in the 10-year range. That alignment helped the muni market."
On Wednesday, municipal bond market scales ended weaker after posting gains Monday and Tuesday.
Yields on the MMD triple-A GO scale ended as much as one basis point higher. The 10-year yield and 30-year yield rose one basis point each to 1.95% and 3.10%, respectively. The two-year finished flat at 0.31% for the 22nd consecutive session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale also ended as much as one basis point higher. The 10-year and 30-year yields rose one basis point each to 2.01% and 3.19%, respectively. The two-year held at 0.33% for the 17th session.
Treasuries were stronger Thursday morning after posting losses Wednesday. The benchmark 10-year yield fell one basis point to 1.94% while the 30-year yield dropped two basis points to 3.17%. The two-year was steady at 0.25%.
In economic news, initial jobless claims rose 2,000 to 336,000 for the week ending March 16, below economists' expectations of 340,000.
"With next week's data, the Labor Department will provide revised seasonal adjustment factors for unemployment claims," wrote economists at RDQ Economics. "If the recent downward trend in initial claims survives next week's revisions, this would provide a very encouraging signal on labor market conditions. The March jobless claims data point to a further slowing in the pace of layoffs toward the end of the first quarter and, all else being equal, a pickup in the rate of net job creation."
In other economic news, existing home sales rose 0.8% to a seasonally adjusted 4.98 million-unit rate in February. That pace nearly matched the 5.00 million rate economists had predicted.
"The housing market continues to show signs of improvement as existing home sales rose to their highest level since July 2007 and as median resale prices continue to rise at a double-digit year-over-year pace," RDQ economists wrote. "Although we are coming off a very depressed base, we expect growth in housing activity to be one of the strongest areas of the economy in 2013."
In additional economic news, the Philadelphia Fed Index climbed to positive 2.0 in March from negative 12.5 in February. The index beat economists' expectations of a negative 3.0 reading for the index.
"The Philly Fed index has done a poor job in recent years tracking national trends in manufacturing activity and so its return to positive territory for the first time in 2013 might be little more than catch up to the strength shown in other regions," RDQ economists wrote. "The March report showed improvement in orders, shipments, and employment. It is our view that manufacturing activity in the U.S. is on an upswing after a pause in late 2012 amid the uncertainties relating to the fiscal cliff and this report is consistent with that theme."
