After several weeks of reassuring unemployment data, jobless claims jumped Thursday, adding to economic woes that came to light earlier in the week with a sharp drop in new home sales.
Jobless claims increased 24,000 to 329,000 in the week ending April 19, the Department of Labor said Thursday morning, bringing the four-week average to 316,750. The average is nearly on par with the figure a month ago.
On Wednesday, Commerce Department data showed sales of new single-family homes plunged 14.5% to a 384,000 seasonally adjusted annual rate in March. Sales of new homes were 13.3% below the 470,000 rate in March 2013.
Treasuries remained steady Thursday afternoon, as the 10-year benchmark and the two-year notes were unchanged at 2.70% and 0.46%, respectively. The 30-year yield inched up one basis point to 3.49%.
Muni yields were mixed Thursday afternoon, with yields on bonds maturing from 2018 to 2019 falling as much as two basis points. Yields on bonds maturing on the intermediate part of the curve were steady, while those maturing beyond 2040 slid as much as one basis point. The short end of the curve was steady, according to the Municipal Market Data's triple-A scale.
While bond sales this week are set to touch as much as $7.5 billion, the most in more than a month, issuers like the state of California have been able to price bonds aggressively, offering bonds with lower returns than what traders want.
Illinois, with an A3 rating by Moody's Investors Service and A-minus rating from Standard & Poor's and Fitch, could be the answer to investors seeking yield. But with several deals already completed this year and pension reform underway, the issue may come pricier than buyers like, some traders said.
Spreads on Illinois bonds in the primary have narrowed this year, with a $250 million sale April 10 that came with a 10-year bond 95 basis points above the Municipal Market Data AAA scale. That compared with a spread of 129 basis points on a similar maturity in a sale in February.
Wells Fargo Securities will bring the $750 million of Illinois GOs, the largest negotiated deal of the week. The bonds will mature serially from 2015 to 2039.
Also in the negotiated market, Bank of America Merrill Lynch plans to issue $700.2 million of unemployment compensation obligation assessment revenue refunding bonds for the Texas Public Finance Authority. The bonds received a Aaa rating from Moody's and A-minus from both S&P and Fitch.
In the competitive market, the BofA won the bid on $225 million of Virginia Public School Authority school financing refunding bonds. The deal is rated AA1 by Moody's, and AA-plus by both S&P and Fitch.
BofA brought the third part of the $1.2 billion New Jersey Economic Development Authority deal to the market late Wednesday. Yields on the $626.4 million of taxable school facilities construction refunding bonds ranged from 0.499% in 2015 to 2.321% in 2018.
JP Morgan Securities brought $100 million of multi-family housing revenue bonds for the New York City Housing Development Corporation late Wednesday. The bonds were priced at par to yield from 0.25% in 2014 to 3.69% in 2024. The bonds are callable at par in 2023.
