NEW YORK – The California municipal market was unchanged to slightly firmer Thursday.
“I think we’re definitely firmer a basis point or two,” the trader said. “There may not be a ton going on, but it feels about two basis points better to me.”
The Municipal Market Data triple-A 10-year scale dipped two basis points Thursday to 3.34%, the 20-year scale declined one basis point to 4.58%, and the scale for 30-year bonds fell two basis points to 4.80%.
In the daily MMD commentary, Randy Smolik wrote “dealers are still selling the fact that munis should not be at the current historically attractive ratios to taxables.”
“Unless proven wrong by heavier selling or a surge in the primary calendar, they continue to have conviction to support levels,” he wrote.
Thursday’s triple-A muni scale in 10 years was at 98.5% of comparable Treasuries and 30-year munis were at 105.0%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 111.9% of the comparable London Interbank Offered Rate.
Treasuries showed some gains Thursday. The benchmark 10-year note was quoted recently at 3.39% after opening at 3.41%. The 30-year bond was quoted recently at 4.57% after opening at 4.58%. The two-year note was quoted recently at 0.59% after opening at 0.62%.
The Treasury Department auctioned $29 billion of seven-year notes, with a 2 5/8% coupon, a 2.744% high yield, a price of 99.25. The bid-to-cover ratio was 2.85. The Federal Reserve banks bought $577.9 million for their own account in exchange for maturing securities.
In economic data released Thursday, initial jobless claims surged by 51,000 to a three-month-high of 454,000 during the week ended Jan. 22, as new filings delayed by bad weather poured in from the Southeast.
Continuing claims increased 94,000 to 3.991 million the week ended Jan. 15. Economists expected 405,000 initial claims and 3.85 million continuing claims, according to Thomson Reuters.
Durable goods orders unexpectedly declined in December, dropping 2.5% to $191 billion, as orders for big-ticket nonmilitary aircraft sharply decreased.
Excluding transportation equipment, which can fluctuate greatly from month to month, durable goods orders grew 0.5% to $151.8 billion.
Economists forecast that durable goods would rise 1.5% and orders excluding transportation would increase 0.8%, according to Thomson Reuters.
Pending home sales climbed 2.0% to a December reading of 93.7 as the expanding economy and historically low borrowing costs spurred buyers.
Economists predicted a 1.0% increase for the index, which has a base year of 2001. The winter months are generally the lightest time of the year for home purchases.
Activity in the California new-issue market was light Thursday.
Previous Session's Activity
The most actively traded security in the state yesterday was California Statewide Communities Development Authority 6s of 2042, which traded 62 times at a high of 99.500 and a low of 97.243.
