NEW YORK – The California municipal market was slightly firmer Tuesday as long muni yields closed to within one basis point of matching long Treasuries.
A trader in Los Angeles said that while the market “seems to have some buyers back,” he is “not necessarily seeing much change.”
“If anything, we may be just a touch better, maybe one or two basis points,” the trader said. “I am hoping that we continue to improve over this week. Seems like in the last week or so, July reinvestments have come off the sidelines and there has been some activity.”
The Treasury market was nearly flat Tuesday. The benchmark 10-year note was quoted recently at 2.95%, after opening at 2.96%. The 30-year bond was recently quoted at 3.98% after also opening at 3.98%. The two-year note was recently quoted at 0.59% after also opening at 0.59%.
The Municipal Market Data triple-A scale yielded 2.61% in 10 years and 3.68% in 20 years Monday, compared to levels of 2.60% and 3.68% Friday. The scale yielded 3.97% in 30 years Monday, matching 3.97% Friday.
Tuesday’s triple-A muni scale in 10 years was at 87.5% of comparable Treasuries and 30-year munis were at 99.7%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 105.6% of the comparable London Interbank Offered Rate.
In economic data released Tuesday, U.S. housing starts slipped 5.0% to a seasonally adjusted annual rate of 549,000 in June as home building permits increased 2.1% to 586,000.
The level of housing starts reached an eight-month low while the increase in building permits reversed two straight months of declines.
Building permits rose in the Northeast and West, but fell in the South and Midwest. Permits for single-family homes fell to 421,000, the third consecutive monthly decline. Total building permits for May were unrevised at 574,000.
Housing starts fell in all four U.S. regions. Single-family housing starts fell to 454,000, the lowest level in 13 months. May housing starts were revised lower to 578,000 from 593,000 reported last month.
Economists polled by Thomson Reuters expected 580,000 housing starts and 570,000 building permits for the month, according to the median estimate.
Activity in the California new-issue market was light Tuesday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable Monrovia, Calif., 6.625s of 2020, which traded 137 times at a high of 100.954 and a low of 98.704.
