NEW YORK – California tax-exempts were slightly firmer Tuesday as 20-year municipals dropped to another record low, albeit with light to moderate secondary trading activity.
“There is definitely some firmness out there, but it’s a quiet week,” a trader in Los Angeles said. “We’re going to pick up maybe a basis point, maybe two, but it’s the week before Labor Day. There’s just not a lot trading.”
The Municipal Market Data triple-A scale yielded 2.18% in 10 years and an all-time low of 3.28% in 20 years Tuesday, following 2.19% and 3.30% Monday. The scale yielded 3.67% in 30 years Tuesday, following 3.69% Monday.
20-year tax-exempts set a new record low for the fifth time in the past eight sessions. Additionally, while not setting records today, yields have still dropped to new all-time lows in 10-year munis 12 times in the past 17 sessions. Also, 30-year tax-exempts set new record lows four times in the past eight sessions.
The 20-year yield of 3.28% is a new record low, while 2.18% is one basis point higher than the 10-year record of 2.17%, established last Wednesday. The 3.67% level for 30-year bonds matches the all-time record, which also was set Wednesday.
Tuesday’s triple-A muni scale in 10 years was at 87.9% of comparable Treasuries and 30-year munis were at 104.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 116.9% of the comparable London Interbank Offered Rate.
The Treasury market showed gains Tuesday. The benchmark 10-year note was recently at 2.47% after opening at 2.52%.
The 30-year bond was recently quoted at 3.52% after opening at 3.58%. The two-year note was at 0.48% after opening at 0.50%.
Activity in the California new-issue market was light Tuesday.
In economic data released Tuesday, the Chicago Purchasing Managers’ Business Barometer fell to 56.7 in August from 62.3 in July. Economists polled by Thomson Reuters predicted a 50.4 reading for the indicator.
The consumer confidence index climbed to 53.5 in August from an upwardly revised 51.0 last month. The July index was originally reported as 50.4. Economists polled by Thomson Reuters predicted the index would be 50.4.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable Sonoma County 6s of 2029, which traded 83 times at a high of 103.500 and a low of 100.500.
