Calif. Market Close: Tax-Exempts Finish Flat to Slightly Weaker

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NEW YORK – The California municipal market was unchanged with a slightly weaker tone Friday amid fairly light secondary trading activity.

The Municipal Market Data triple-A 10-year scale rose one basis point Monday to 3.00%, the 20-year was unchanged at 4.28%, and the scale for 30-year bonds climbed one basis point to 4.76%.

Friday’s triple-A muni scale in 10 years was at 86.0% of comparable Treasuries and 30-year munis were at 103.5% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 108.9% of the comparable London Interbank Offered Rate.

The Treasury market was stronger Friday. The benchmark 10-year note was quoted recently at 3.49% after opening at 3.56%. The 30-year bond was quoted recently at 4.60% after opening at 4.62%. Meanwhile, the two-year note was quoted recently at 0.69% after opening at 0.76%.

“The muni market has changed gears, no longer fixated by the light issuance of 2011 but focusing on a growing primary calendar,” wrote Randy Smolik in the daily MMD commentary. “Plunging muni yields and ratios to taxables have encouraged a round of refunding supply to be scheduled next week.”

In economic data released Friday, nonfarm U.S. payrolls increased by 192,000 in February as private sector payrolls jumped by 222,000, while the unemployment rate edged lower to 8.9%, the Labor Department reported Friday.

Total payrolls for January and December were revised higher, adding a combined 58,000 to the work force.

The manufacturing sector added 33,000 for the month with most of the gains coming in durable goods industries. Construction-sector employment snapped back, adding 33,000 jobs in February after disruptive winter storms in January caused temporary layoffs.

The unemployment rate, at 8.9%, is the lowest since April 2009. The 222,000 gain in private payrolls was the largest since April 2010.

January private payrolls were revised up to a gain of 68,000 from a 50,000 increase reported last month.

Economists expected 178,000 total non-farm payrolls and 185,000 private sector payrolls, according to the median estimate from Thomson Reuters. They expected the unemployment rate to drift up to 9.1%.

Factory orders jumped 3.1% in January on a surge in transportation orders.

Orders excluding transportation increased 0.7% and durable factory orders excluding transportation goods fell 3.0% for the month, down for the first time in three months.

January transportation orders jumped 27.3% for the month, the strongest gain since September 2006.

Economists expected factory orders would increase 2.0% for the month, according to the median estimate from Thomson Reuters.

Previous Session's Activity
The most actively traded security in the state yesterday California Health Facilities Financing Authority 7.875s of 2026, which traded 78 times at a high of 101.875 and a low of 99.375.

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