Prices of top-rated municipal bonds were stronger with Treasuries in early action, traders said, after the release of a disappointing jobs report.
Equities fell after the release of a weak employment report for September.
Non-farm payrolls rose less than projected last month while the jobless rate held at 5.1%.
The economy added 142,000 jobs in September and a followed a downwardly revised 136,000 gain in August, originally reported as a 173,000 gain. Economists polled by IFR Markets had expected a 203,000 gain in non-farm payrolls jobs last month.
The yield on the 10-year benchmark muni general obligation on Friday was five to seven basis points weaker from 2.03% on Thursday, while the yield on the 30-year GO was weaker by three to five basis points from 3.04%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher with the yield on the two-year Treasury note dropping to 0.56% from 0.64% on Thursday, while the 10-year yield fell to 1.93% from 2.04% and the 30-year yield decreased to 2.78% from 2.88%.
In early trading, the Dow Jones Industrial Average was down about 250 points. The Nasdaq Composite Index declined around 65 points and the S&P 500 Index dropped about 30 points.
The 10-year muni to Treasury ratio was calculated on Thursday at 99.8% versus 98.6% on Wednesday, while the 30-year muni to Treasury ratio stood at 106.8% compared to 105.6%, according to MMD.
The Week’s Primary Market
Municipal bond traders saw plenty of supply come to market during the week.
Washington state offered about $983 million of bonds, which were made up of four competitive sales and one negotiated deal.
Bank of America Merrill Lynch priced the state’s $53 million of Series 2016A-2 various purpose general obligation green bonds.
JPMorgan Securities won Washington’s $444 million of Series 2015A-1 various purpose general obligation bonds with a true interest cost of 3.60%; JPMorgan also won the $61 million of Series 2016T GO taxable bonds with a TIC of 1.53%. BAML won the $194 million of Series R-2016A various purpose GO refunding bonds with a TIC of 1.59% and also won the $189 million of Series 2016B motor fuel tax GOs with a TIC of 3.49%. All of the issues are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
RBC Capital Markets priced Connecticut's $848 million of Series 2015A and Series 2015B special tax obligation bonds for transportation infrastructure purposes for institutions after a one-day retail order period. The bonds were rated Aa3 by Moody’s and AA by S&P and Fitch.
RBC also priced the California State of Public Works Board’s $556 million of Series 2015F and 2015G lease revenue refunding bonds. The bonds are rated A1 by Moody’s, A-plus by S&P and A by Fitch.
BAML priced Energy Northwest, Wash.’s $108 million of Series 2015C Project 1 electric revenue refunding bonds, electric revenue refunding bonds for the Columbia Generation Station and Project 3 electric revenue refunding bonds. The issue was rated Aa1 by Moody’s, AA-minus by S&P and AA by Fitch.
Ramirez & Co. priced the Massachusetts Bay Transportation Authority's $357 million of senior sales tax bonds. The issue was rated Aa2 by Moody’s and AA-plus by S&P.
Barclays Capital priced Miami-Dade County Educational Facilities Authority, Fla.'s $400 million of Series 2015A tax-exempt revenue and revenue refunding bonds for the University of Miami. The bonds were rated A3 by Moody’s and A-minus by S&P.
JPMorgan priced the Greater Orlando Aviation Authority, Fla.’s $216.93million of airport facilities revenue bonds subject to the alternative minimum tax. The issue was rated Aa2 by Moody’s and AA-minus by S&P and Fitch.
JPMorgan also priced the Board of Regents of the University of North Texas System's $105.26 million of Series 2015A revenue financing system refunding and improvement bonds. The bonds were rated Aa2 by Moody's and AA by Fitch.
And JPMorgan won Collierville, Tenn.’s $112 million of general obligation bonds with a TIC of 3.38%. The issue was rated triple-A by Moody’s.
Citigroup priced the Contra Costa Transportation Authority, Calif.’s $168 million of limited tax Series 2015A sales tax revenue bonds. The bonds were rated AA-plus by S&P.
Municipal Bond Funds See Outflows
Municipal bond funds experienced a back slide, reporting outflows for the latest week, according to Lipper data released on Thursday.
Weekly reporting funds experienced $252.457 million of outflows in the week ended Sept. 30, after inflows of $231.252 million the week before, Lipper said.
The latest outflow brings to 21 out of 40 weeks this year that the funds have seen cash going out. Flows for the year to date remain in the green, totaling over $1.4 billion.
The four-week moving average remained negative at $132.065 million after being in the red at $215.571 million in the previous week. The moving average has now been negative for 20 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 experienced outflows, losing $7.271 million in the latest week, following inflows of $752.920 million in the previous week. Intermediate-term funds had outflows of $92.709 million on top of shedding $61.783 million in the prior week.
Exchange traded funds reported inflows of $137.849 million, after outflows of $90.678 million in the previous week.
And high-yield muni funds reported outflows of $10.488 million in the latest reporting week, after an inflow of $178.146 million the previous week.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,165 trades on Thursday on volume of $9.909 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $135.9 million to $14.48 billion on Friday. The total is comprised of $4.07 billion competitive sales and $10.41 billion of negotiated deals.
