NEW YORK – The California municipal market was unchanged to slightly firmer Wednesday, amid light to moderate secondary trading activity.
A trader in Los Angeles termed the session a “classic push-pull between we-got-him and they-want-him, we know they need to put the money to work, so we are not giving up much in here.”
“People are grudgingly putting money to work,” the trader said. “It should be up a basis point or two during the mid part of the scale today. The market place is very quiet, but it still has a very firm tone to it. What few trades have taken place, have been at the kinds of levels that give you an indication that they have money, they have to put some of it to work. They are not going out and buying bonds with both hands.”
The Treasury market showed some gains Wednesday. The benchmark 10-year note was quoted recently at 3.05%, after opening at 3.12%. The 30-year bond was recently quoted at 4.04% after opening at 4.10%. The two-year note was recently quoted at 0.62% after opening at 0.66%.
The Treasury Department today auctioned $13 billion of 30-year bonds with a 4 3/8% coupon at a 4.080% high yield, a price of 105.05. The bid-to-cover ratio was 2.89. The Fed banks also bought $3.69 million for their own account in exchange for maturing securities.
The Municipal Market Data triple-A scale yielded 2.64% in 10 years and 3.70% in 20 years Wednesday, matching levels of 2.66% and 3.70% Tuesday. The scale yielded 3.99% in 30 years Wednesday, matching 3.99% Tuesday.
Wednesday’s triple-A muni scale in 10 years was at 85.5% of comparable Treasuries and 30-year munis were at 97.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 102.8% of the comparable London Interbank Offered Rate.
Total import prices for May fell 0.5%, revised higher from the 0.6% drop initially reported. The back-to-back declines in May and June were the first since December 2008 and January 2009.
Economists expected import prices to decrease 0.3%, according to the median estimate from Thomson Reuters.
Retail sales dropped a greater-than-expected 0.5% in June, marking the first two consecutive months of decline in the indicator since early last year.
However, retail sales excluding autos dipped just 0.1%.
The headline June 0.5% decrease followed a revised 1.1% decline in May that was originally reported as a 1.2% drop, while the 0.1% ex-autos dip followed a 1.2% decrease originally reported as a 1.1% decline.
Economists polled by Thomson Reuters expected total retail sales to decrease by 0.2% and for flat sales excluding autos, according to the median estimate.
Business inventories increased 0.1% in May as total business sales declined 0.9%, the largest amount in 14 months.
Economists expected inventories would increase 0.3%, according to the median estimate from Thomson Reuters. Business inventories rose an unrevised 0.4% in April.
Activity in the California new-issue market was light today.
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.
