NEW YORK – The California municipal market was unchanged to firmer by about one or two basis points today, as some of the week’s larger deals were priced in the primary.
“It’s a little bit firmer out there, but it really depends on what you’re trading,” a trader in Los Angeles said. “I’m seeing strength more so on the long end than anywhere else. If we’re better it’s maybe a basis point or two. But you could still call it fairly unchanged and not really be wrong.”
The Treasury market showed some gains today. The yield on the benchmark 10-year note opened at 3.70% and was quoted recently at 3.66%. The yield on the two-year note opened at 0.89% and was quoted recently at 0.89%. The yield on the 30-year bond was quoted recently at 4.54%, after opening at 4.59%.
Today’s Municipal Market Data triple-A scale yielded 3.03% in 10 years and 3.74% in 20 years, compared to levels of 3.04% and 3.76%, respectively, yesterday. The scale yielded 4.05% in 30 years today, following yesterday’s level of 4.08%.
As of yesterday’s close, the triple-A muni scale in 10 years was at 81.9% of comparable Treasuries, according to MMD, while 30-year munis were 88.7% of comparable Treasuries. Also, as of yesterday’s close, 30-year tax-exempt triple-A rated general obligation bonds were at 91.5% of the comparable London Interbank Offered Rate.
In economic data released today, the producer price index increased 0.2% in December, after a 1.8% increase the previous month.
Core producer prices, those excluding food and energy costs, were flat for the month, after a 0.5% jump the previous month.
Economists expected producer prices to be flat in December and for core prices to increase 0.1%, according to the median estimate from Thomson Reuters.
Groundbreaking for new home construction was down 4.0% in December to a rate of 557,000, while private housing permits rose 10.9% to a rate of 653,000.
The 557,000 December rate for private housing starts was lower than the 580,000 median estimate predicted by economists polled by Thomson Reuters. It followed an upwardly revised 580,000 rate in November.
Meanwhile, the 653,000 December level of private housing building permits came after a revised 589,000 November figure. However, the December rate easily beat economists’ 580,000 estimate.
Activity in the California new-issue market was light today.
Previous Session’s Activity
The Municipal Securities Rulemaking Board reported taxable California BABs 7.3s of 2039 as the state’s most active yesterday. The bonds traded 76 times at a high of 100.223 and a low of 95.604.
