With most of the week's primary issuance already priced, the municipal bond market set its eyes on a $300 million auction of Illinois taxable bonds.
The sales tax revenue bonds are rated AAA by Standard & Poor's and AA-plus by Fitch Ratings.
"I'm looking at this market, looking at projected issuance, looking at Treasuries, and I don't see any huge compelling reasons not to own paper," a Chicago trader said. And while yields are still near their relative lows, it's better than holding cash, this trader said.
Trading activity was light ahead of the pricing. "The market is dead," a New York trader said.
Municipal bond scales ended mostly unchanged Wednesday after posting losses Monday and Tuesday.
Yields on the Municipal Market Data triple-A GO scale finished flat. The 10-year and 30-year yields finished unchanged at 1.75% and 2.89%, respectively. The two-year held at 0.29% for the 24th session.
Yields on the Municipal Market Advisors 5% scale ended mostly steady. The 10-year yield slid one basis point to 1.80%. The 30-year closed unchanged at 3.02% for the second session and the two-year finished unchanged at 0.32% for the 24th session.
The front end of the Treasury yield curve steepened as the two-year yield fell one basis point to 0.23% and the benchmark 10-year yield spiked four basis points to 1.81%. The 30-year was flat at 2.99%.
In economic news, initial jobless claims fell 4,000 to 323,000 in the week ending May 4. Claims were lower than the expected 335,000.
"The labor market appears to be improving as the rate of job losses continues to decline," wrote economists at RDQ Economics. "The four-week average of jobless claims has now fallen to the level that prevailed at the onset of the Great Recession. Claims would appear to be pointing to a pick-up in the rate of job creation and, if this lower level of jobless claims holds for another two weeks, we would be likely expect to see a nonfarm payroll gain in excess of 200,000 for May."
