NEW YORK – The California municipal market was mostly flat Wednesday in a lightly-traded session.
“There were little pockets of firmness and little pockets of weakness, but overall, I wouldn’t call it anything but flat,” a trader in San Francisco said. “You maybe picked up a basis point in the belly of the curve and maybe lost a basis point out long. But there wasn’t really a lot of trading today, and we were just mostly flat.”
The Municipal Market Data triple-A scale yielded 2.39% in 10 years and 3.33% in 20 years Wednesday, matching Tuesday. The scale yielded 3.73% in 30 years Wednesday, following 3.72% Tuesday.
In eight of the past 10 sessions, at least one of the 10-, 20-, or 30-year yields have risen. Before the recent sell-off, yields dropped to all-time lows in 10-year munis 12 times in the prior 17 sessions. Also, 30-year tax-exempts set record lows four times in the previous eight sessions, while 20-year munis established all-time lows five times over the same time period.
The record lows currently stand at 2.17% and 3.67% in 10- and 30-year tax-exempts, both established August 25. The 20-year low of 3.28% was set August 31.
Wednesday’s triple-A muni scale in 10 years was at 88.2% of comparable Treasuries and 30-year munis were at 96.4%, according to MMD, while 30-year tax-exempt triple-A GO bonds were at 106.6% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Wednesday. The benchmark 10-year note was quoted at 2.73% after opening at 2.68%.
The 30-year bond was quoted at 3.88% after opening at 3.80%. The two-year note was quoted at 0.50% after opening at 0.49%.
In economic data released Wednesday, industrial production decelerated in August as the pace of growth slowed to 0.2% from 0.6% in July, the Federal Reserve Board reported Wednesday. The gain matched economists’ expectations.
Industrial capacity utilization — a measure of factory usage — rose to 74.7% from 74.6%, and is 4.7 percentage points higher than a year ago. Economists expected utilization to reach 75%, according to the median estimate from Thomson Reuters.
Import prices rose 0.6% in August to post a second straight monthly increase and the largest gain in four months, the Labor Department reported Wednesday.
Economists polled by Thomson Reuters expected an increase of 0.3%, according to the median estimate.
Activity in the California new-issue market was somewhat light Wednesday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable Sonoma County 6s of 2029, which traded 86 times at a high of 102.288 and a low of 98.473.
