NEW YORK – The California municipal market was mostly unchanged with a slightly firmer tone Wednesday amid fairly light secondary trading activity.
“We’re definitively in holiday mode now,” a trader in Los Angeles said. “There’s just not a whole lot going on. There is some trading going on, it’s not completely dead in the secondary, but it’s pretty light. On the whole, we’re unchanged. There’s some firmness out there, but really not enough activity for me to call it better.”
The Municipal Market Data triple-A 10-year scale declined one basis point Wednesday to 3.14%, the 20-year scale was unchanged at 4.37%, and the scale for 30-year debt held at 4.66%.
Wednesday’s triple-A muni scale in 10 years was at 93.7% of comparable Treasuries and 30-year munis were at 104.7%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 112.0% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Wednesday. The benchmark 10-year note was quoted recently at 3.35% after opening at 3.30%. The 30-year bond was quoted recently at 4.44%, after opening at 4.42%. The two-year note was quoted recently at 0.64% after opening at 0.61%.
In economic data released Wednesday, the U.S. economy expanded more slowly than economists expected in the third quarter, when it grew at an annual rate of 2.6% according to the third and final estimate.
The estimate was revised upward from a prior 2.4% growth rate due to a stronger contribution from inventories. Economists forecast a 2.8% pace.
The annualized expansion rate of the U.S. economy was 1.7% in the second quarter and 3.7% in the first quarter.
The rate of expansion for core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, was revised downward to a record low of 0.5% from the 0.8% rate previously reported.
The final third quarter growth rate was the lowest reading for core PCE since quarterly records began in 1959.
Economists expected core PCE to increase 0.8%. The third quarter expansion rate for core personal consumption expenditures compares with annualized growth paces of 1.0% for the second quarter of this year and 0.6% for the fourth quarter of 2008, when the recession prompted a gross domestic product to shrink at a 6.8% rate. The 18-month recession began in December 2007.
Home resales rose more slowly than economists expected in November, expanding 5.6% in November to a seasonally adjusted 4.68 million rate.
Economists expected 4.71 million sales for the month, according to the median estimate for existing home sales. October sales were 4.43 million.
Previous Session's Activity
The most actively traded security in the state yesterday was California 3s of 2011, which traded 78 times at a high of 100.989 and a low of 100.368.
