Municipal bonds were steady to weaker in early activity, according to traders, who were going through their inventory after a busy week and looking ahead of next week's nearly $10 billion new issue calendar.
Ipreo estimates volume for next week at $9.98 billion, up from a revised $8.57 billion sold this week, according to updated data from Thomson Reuters.
Next week's calendar is comprised of $7.42 billion of negotiated deals and $2.56 billion of competitive sales.
Secondary Market
The market saw a strong employment report for November. Non-farm payrolls rose 178,000 in November, above the 175,000 jobs gain predicted by economists surveyed by IFR Markets. The unemployment rate fell to 4.6%, a nine-year low. Economists polled by IFR Market had forecast the unemployment rate would remain unchanged at 4.9%.
The yield on the 10-year benchmark muni general obligation on Friday rose as much as one basis point from 2.58% on Thursday, while the yield on the 30-year was unchanged from 3.35%, according to an early read of Municipal Market Data's triple-A scale.
U.S. Treasuries strengthened on Friday. The yield on the two-year Treasury declined to 1.12% from 1.15% on Thursday, the 10-year Treasury dropped to 2.40% from 2.44%, while the yield on the 30-year Treasury bond decreased to 3.07% from 3.10%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 105.6% compared to 106.9% on Wednesday while the 30-year muni to Treasury ratio stood at 108.1% versus 108.2%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 62,459 trades on Thursday on volume of $20.87 billion.
Week's Primary Market
The week was choc-a-block with new deals.
Morgan Stanley priced Chicago O'Hare International Airport's $1.11 billion of general airport senior lien revenue bonds in four series. The deal is rated A by S&P Global Ratings and Fitch Ratings except for the Series 2016F 2035-2047 maturities, which are insured by Build America Mutual and rated AA by S&P.
Barclays Capital priced the New Jersey Economic Development Authority's $970.7 million deal. The bonds are rated A3 by Moody's Investors Service, BBB-plus by S&P and A-minus by Fitch.
Barclays also priced the District of Columbia's $590.32 million of general obligation bonds. The deal is rated Aa1 by Moody's and AA by S&P and Fitch.
Morgan Stanley priced the Alabama Economic Settlement Authority's $629.58 million of Series 2016 A&B BP taxable and tax-exempt settlement revenue bonds. The deal is rated A2 by Moody's and A-minus by S&P.
Raymond James & Associates priced the New York City Municipal Water Finance Authority's $415.65 million of Fiscal 2017 Series CC water and sewer system second general resolution revenue bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Wells Fargo Securities priced the Board of Regents of the University of Texas System's $306.93 million of Series 2016J revenue financing system bonds. The deal is rated triple-A by Moody's, S&P and Fitch.
JPMorgan Securities priced the Katy Independent School District, Texas' $161.38 million refunding. The deal is backed by the Permanent School Fund guarantee program and rated triple-A by Moody's and S&P.
Wells Fargo priced Montgomery County, Texas' $121 million of Series 2016A unlimited tax road bonds and limited tax refunding bonds. The deal is rated triple-A by Moody's and AA-plus by Fitch.
Piper Jaffray priced Portland Community College, Ore.'s $116.73 million of Series 2016 general obligation refunding bonds. The deal is rated Aa1 by Moody's and AA by S&P.
In the competitive arena, Massachusetts sold $600 million of consolidated loan of 2016 general obligation bonds in three separate offerings.
Bank of America Merrill Lynch won the $300 million of Series J GOs with a true interest cost of 4.11%. Citigroup won the $150 million of Series I GOs with a TIC of 3.67%. Goldman Sachs won the $150 million of Series H GOs with a TIC of 2.61%. All three sales are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Montgomery County, Md., competitively sold $340 million of consolidated public improvement general obligation bonds of 2016 Series A. Citi won the Series A GOs with a TIC of 3.28%. The deal is rated triple-A by Moody's, S&P and Fitch.
The city and county of San Francisco's Public Utility Commission sold $259.35 million of Series 2016C taxable water revenue green bonds. Wells Fargo Securities won the deal with a TIC of 3.90%. The deal is rated Aa3 by Moody's and AA-minus by S&P.
Orange County, Fla., sold two separate competitive issues totaling $296.57 million. Bank of America Merrill Lynch won the $206.74 million of Series 2016B tourist development tax refunding revenue bonds with a TIC of 4.04%. BAML also won the $89.83 million of Series 2016A tourist development tax refunding revenue bonds with a TIC of 4.05%. Both sales are rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
The state of Texas sold $157.14 million of Series 2016 general obligation college student loan bonds, subject to the alternative minimum tax. Citigroup won the deal with a true interest cost of 4.10%. The deal is rated triple-A by Moody's Investors Service and S&P Global Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $2.97 billion to $15.25 billion on Friday. The total is comprised of $3.75 billion of competitive sales and $11.50 billion of negotiated deals.
Lipper: Muni Bond Funds See Outflows
Municipal bond funds again reported outflows as investors pulled cash out of the market, according to Lipper data released late Thursday.
The weekly reporters saw $2.081 billion of outflows in the week ended Nov. 30, after outflows of $2.232 billion in the previous week.
The four-week moving average remained in the red at negative $1.815 billion after being negative $1.376 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds experienced outflows, losing $1.238 billion in the latest week after outflows of $1.467 billion in the previous week. Intermediate-term funds had outflows of $523.811 million after outflows of $500.210 million in the prior week.
National funds had outflows of $1.745 billion after outflows of $1.849 billion in the previous week. High-yield muni funds reported outflows of $714.491 million in the latest reporting week, after outflows of $929.623 million the previous week.
Exchange traded funds saw inflows of $6.013 million, after outflows of $77.721 million in the previous week.