NEW YORK - The California municipal market was slightly firmer yet again Tuesday amid light to moderate secondary trading, with 10-year municipal yields dipping to yet another all-time low, maintaining firmness despite a Treasury sell-off.
"We're up another couple basis points," a trader in Los Angeles said. "Probably two, maybe three basis points on the whole."
The Municipal Market Data triple-A scale yielded a record-low 2.36% in 10 years and 3.47% in 20 years Tuesday, following levels of 2.39% and 3.50% Monday. The scale yielded 3.83% in 30 years Tuesday, following 3.84% Monday.
While 10-year munis keep setting historical lows, 20- and 30-year tax-exempts are also close to making history. The 20-year yield of 3.47% is just four basis points away from the low of 3.43% set on Oct. 2, 2009. Additionally, the 30-year yield of 3.83% is just two basis points higher than the all-time low of 3.81%, also set Oct. 2, 2009.
Monday's triple-A muni scale in 10 years was at 89.9% 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 111.9% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Tuesday, giving back much of Monday's gains. The benchmark 10-year note was quoted recently at 2.63% after opening at 2.56%. The 30-year bond was quoted recently at 3.76% after opening at 3.71%. The two-year note was quoted recently at 0.51% after opening at 0.48%.
In economic data released Tuesday, producer prices rose 0.2% in July, the first monthly increase after three consecutive declines.
Core producer prices, excluding food and energy costs, increased 0.3%, more than economists' estimates and the ninth consecutive increase.
The headline 0.2% rise matched economists' expectations while the core prices increase compared to a 0.1% uptick predicted by the median estimate from Thomson Reuters.
U.S. housing starts increased to 546,000 at a seasonally adjusted annual rate in July as building permits fell to 565,000.
The July building permits level was the lowest since May 2009. Housing starts for June were revised lower to 537,000 from 549,000, the lowest level since October 2009. June building permits were also revised lower to 583,000 from 586,000 reported last month.
Economists expected 560,000 housing starts and 580,000 building permits in July, according to the median estimate from Thomson Reuters.
Industrial production increased 1.0% in July as auto and parts production jumped, while industrial capacity utilization increased to 74.8% in July, the 13th consecutive month without a decline.
June's industrial production figure was revised lower, swinging to a 0.1% decline from a 0.1% increase reported last month.
Capacity utilization in June was unrevised at 74.1%.
Economists polled by Thomson Reuters expected industrial production would increase 0.5% and capacity utilization would increase to 74.5%, 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 Alameda Public Financing Authority 6.517s of 2027, which traded 63 times at a high of 102.750 and a low of 100.500.
