NEW YORK – The California municipal market was firmer Tuesday amid moderate secondary trading activity.
“We’re up maybe four, maybe five basis points,” a trader in Los Angeles said.
The Municipal Market Data triple-A 10-year scale fell five basis points Tuesday to 3.28%, the 20-year dropped five basis points to 4.52%, and the scale for 30-year bonds declined four basis points to 4.86%.
In the daily MMD commentary, Randy Smolik wrote that he outlook of modest primary scheduling through March emboldened underwriters to make strong bids on a wide array of competitive deals.
“Customers waiting for a buying opportunity capitulated today, reaching for prime quality paper throughout most of the curve,” he wrote. “Some attractive block selling in the 15-year range didn't discourage more aggressive bidding later in the session. Treasuries provided a steady to firmer market backdrop.”
Tuesday’s triple-A muni scale in 10 years was at 90.9% of comparable Treasuries and 30-year munis were at 104.3% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 110.0% of the comparable London Interbank Offered Rate.
Treasuries showed losses Tuesday. The benchmark 10-year note was quoted recently at 3.63% after opening at 3.61%. The 30-year bond was quoted recently at 4.69% after opening at 4.67%. The two-year note was quoted recently at 0.86% after also opening at 0.84%.
In economic data released Tuesday, retail sales increased by a seasonally adjusted 0.3% in January as sales excluding autos also increased 0.3%, both below economists’ estimates.
The January retail sales increase was the smallest since June when total retail sales fell 0.3%.
Economists expected sales would increase 0.5% and sales excluding autos would increase 0.6%, according to the median estimate from Thomson Reuters.
Import prices rose 1.5% in January, and for the first time since July 2008 the index advanced at least 1.0% for four consecutive months, while export prices increased 1.2% in the month.
Import prices were up 4.3% over the past three months, the largest three-month gain since a 5.6% advance in June 2009.
The increase in January was due to higher fuel and nonfuel prices and was higher than the 0.8% increase projected by economists and reported by Thomson Reuters.
Business inventories increased 0.8% in December, while sales jumped 1.1%.
Inventories for November were revised higher to an increase of 0.4% from a 0.2% gain in November. November sales rose 1.4%.
Retail business inventories rose 0.4% in December after being flat in November.
Economists expected inventories would increase 0.7%, according to the median estimate from Thomson Reuters.
Activity in the California new-issue market was light Tuesday.
Previous Session's Activity
The most actively traded security in the state yesterday was California State University 5.25s of 2034, which traded 41 times at a high of 94.129 and a low of 92.167.
