Prices of top-shelf municipal bonds were mixed to stronger at mid-session, according to traders, as the market went into holiday mode after the release of the August employment report.
While there is no official early dismissal on Friday, all U.S. markets will be closed on Monday for the Labor Day holiday.
The traders left at their desks are now focused on next week's supply, estimated to come in at around $3.7 billion.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Friday was steady from 2.19% on Thursday, while the yield on the 30-year GO was as much as two basis points weaker from 3.13%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mostly higher on Friday, with the yield on the two-year Treasury note rising to 0.72% from 0.70% on Thursday, while the 10-year yield fell to 2.13% from 2.17% and the 30-year yield decreased to 2.89% from 2.94%.
The Labor Department reported that non-farm payrolls rose 173,000 in August and it revised the June and July data upward by a total of 44,000 jobs. The unemployment rate fell to 5.1% in August from 5.3% in July.
Economists polled by IFR Markets had expected non-farm payrolls to rise by 220,000 and the unemployment rate to come in at 5.2%.
The 10-year muni to Treasury ratio was calculated on Thursday at 101.0% versus 100.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 106.2% compared to 105.4%, according to MMD.
Primary Market
Volume for next week is estimated by Ipreo at $3.71 billion, consisting of $3.13 billion of negotiated deals and $575.1 million of competitive sales.
Topping next week's calendar is the North Texas Tollway Authority System's Series 2015B first tier revenue refunding bonds. The bonds, slated to be priced by Barclays Capital on Thursday, are rated A1 by Moody's Investors Service and A by Standard & Poor's.
Jefferies is scheduled to price Austin, Texas' $307.25 million of public improvement bonds, public property finance contractual obligations, and certificates of obligation on Wednesday. The issue is rated triple-A by Moody's, S&P and Fitch Ratings.
JPMorgan Securities is expected to price the Allina Health System's $250 million of Series 2015 taxable bonds on Wednesday. The issue is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
RBC Capital Markets is slated to price the University of Oklahoma's general revenue bonds consisting of Series 2015C tax-exempts and Series 2015D taxable. The issue is rated A-plus by S&P and AA-minus by Fitch.
In the competitive arena, the University of Washington is selling two separate issues totaling almost $193 million on Wednesday. The sales consist of $155.84 million of Series 2015C general revenue and refunding bonds and $36.79 million of Series 2015D taxable general revenue and refunding bonds. The issues are rated triple-A by Moody's and AA-plus by S&P.
Also on the day-to-day competitive slate, and selling with 18-hour notice, is a $230 million issue of Series 2015F public education capital outlay refunding bonds from the Florida state Board of Education. Moody's rated the bonds Aa1 while Fitch rates them triple-A.
Municipal Bond Funds See Outflows
Municipal bond funds saw outflows in the latest week, according to Lipper data released on Thursday.
Funds which report weekly saw $586.481 million of outflows in the week ended Sept. 2, after seeing outflows of $344.563 million in the previous week, Lipper reported.
The latest outflow brings to 18 out of 36 weeks this year that the funds have seen redemptions. Inflows for the year to date are still in the green, totaling over $2 billion.
The four-week moving average remained negative at $219.075 million after being in the red at $149.516 million in the previous week. The moving average has now been negative for 15 weeks in a row. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced outflows, losing $323.912 million in the latest week, after seeing outflows of $29.224 million in the previous week. Intermediate-term funds saw outflows of $82.230 million after seeing outflows of $44.327 million in the prior week.
Exchange traded funds saw outflows of $41.635 million, after experiencing inflows of $61.284 million in the previous week.
And high-yield muni funds saw outflows of $123.945 million in the latest reporting week, after seeing an outflow of $40.317 million the previous week.
In the past 19 weeks, high-yield funds have seen outflows 13 times totaling $1.939 billion and inflows six times totaling $322.011 million.
The Week's Most Actively Quoted Issues
Puerto Rico and New Jersey were some of the most actively quoted names in the week ended Sept. 4, according to data released by Markit.
On the bid side, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 10 unique dealers. On the ask side, the New Jersey Economic Development Authority revenue 4 1/4s of 2026 were quoted by 22 dealers. And among two-sided quotes, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 14 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Sept. 4 were in Connecticut, Puerto Rico and Kansas, according to Markit.
In the revenue bond sector, the Connecticut state Health and Education Facilities Authority 4 1/8s of 2041 were traded 98 times. In the GO bond sector, the Puerto Rico commonwealth 8s of 2035 were traded 36 times. And in the taxable bond sector, the Finney County Unified School District No. 456, Kan., 6.783s of 2034 were traded 16 times, Markit said.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,368 trades on Thursday on volume of $6.059 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $773.9 million to $7.15 billion on Friday. The total is comprised of $2.40 billion competitive sales and $4.75 billion of negotiated deals.
