NEW YORK - The California municipal market was mostly weaker Thursday, weighed down by an influx of long-end customer bid-wanted lists.
"There isn't much movement at all inside of 20 years," a trader in Los Angeles said. "It's maybe a basis point or two weaker if anything. But the long end is off three, maybe four basis points."
The Municipal Market Data triple-A 10-year scale was higher by one basis point Thursday to 3.35%, the 20-year scale held at 4.57%, and the scale for 30-year bonds climbed four basis points to 4.87%.
Thursday's triple-A muni scale in 10 years was at 94.4% of comparable Treasuries and 30-year munis were at 104.3% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 109.4% of the comparable London Interbank Offered Rate.
Treasuries were weaker Thursday. The benchmark 10-year note was quoted recently at 3.55% after opening at 3.47%. The 30-year bond was quoted recently at 4.66% after opening at 4.64%. The two-year note was quoted recently at 0.72% after opening at 0.65%.
"Treasuries faded ahead of Friday payrolls, supply, and as [Federal Reserve chairman Ben] Bernanke sounded more upbeat on the economy," wrote Randy Smolik in the daily MMD commentary. "Muni bidders are tentative, but sellers in the serial range find little need to chase bids with primary supply remaining meek. Sellers were more pronounced beyond the 20-year range as crossover buyers stepped back from the market."
Activity in the California new-issue market was light Thursday.
In economic data released Thursday, initial jobless claims dropped 42,000 to 415,000 for the week ending Jan. 29, the lowest level in four weeks, as unemployment offices returned to normal following a spike a week earlier as unemployment offices reopened after being shut by winter weather.
Continuing jobless claims fell to 3.925 million, a decrease of 84,000.
Economists expected 420,000 initial claims and 3.95 million continuing claims, according to the median estimate from Thomson Reuters.
U.S. nonfarm productivity increased 2.6% at an annual rate in the fourth quarter, the largest gain in three quarters, as businesses' labor costs declined.
Unit labor costs, a ratio of hourly compensation to labor productivity, dropped 0.6% in the fourth quarter, the second straight quarterly decline. Hourly compensation increased 1.9% for the three months ending Dec. 31 and output jumped 4.5%. Increases in hourly compensation tends to increase businesses' labor costs while an increase in output tends to reduce labor costs.
For all of 2010, productivity increased 3.6%, the largest annual gain since 2003. Productivity increased 3.5% in 2009.
Business labor costs declined 1.5% in 2010 following a 1.6% decline in 2009.
Economists expected productivity would increase 2.0% in the fourth quarter, according to the median estimate from Thomson Reuters.
Factory orders increased 0.2% in December. Orders excluding transportation increased 1.7% and total durable goods orders fell 2.3%.
Factory orders for November increased 1.3%, revised higher from a 0.7% reported last month.
Economists expected factory orders to decline 0.5%, according to the median estimate from Thomson Reuters.
The U.S. services sector expanded at a faster pace in January as new orders picked up, the Institute for Supply Management reported Thursday.
ISM's non-manufacturing business activity composite index was 59.4 in December, 57.1 in December, on a seasonally adjusted basis.
Economists polled by Thomson Reuters had expected a 62.0 level.
Previous Session's Activity
The most actively traded security in the state yesterday was San Juan Unified School District 5s of 2028, which traded 60 times at a high of 97.161 and a low of 93.525.
