NEW YORK – Yields in the California municipal market increased slightly Wednesday in light to moderate secondary trading activity.
“I wouldn’t really take today as any sort of evidence that yields are going to start going up on a regular basis,” a trader in Los Angeles said. “We’re weaker by about a basis point overall today, but in pretty light trading, with Labor Day and the long weekend just around the corner.”
Tax-exempts opened September Wednesday with an uptick in yields after doing so just once the entire month of August.
The Municipal Market Data triple-A scale yielded 2.19% in 10 years and 3.29% in 20 years Wednesday, following 2.18% and a record-low 3.28% Tuesday. The scale yielded 3.68% in 30 years Wednesday, following 3.67% Tuesday.
Despite the slight uptick in yields Wednesday, they have still dropped to all-time lows in 10-year munis 12 times in the past 18 sessions. Also, 30-year tax-exempts set record lows four times in the past nine sessions, while 20-year munis have 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 Tuesday.
Wednesday’s triple-A muni scale in 10 years was at 85.2% of comparable Treasuries and 30-year munis were at 100.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 112.5% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Wednesday. The benchmark 10-year note was recently at 2.58% after opening at 2.47%.
The 30-year bond was recently quoted at 3.65% after opening at 3.51%. The two-year note was at 0.51% after opening at 0.47%.
Activity in the California new-issue market was light Wednesday.
In economic data released Wednesday, the overall economy grew for the sixteenth straight time after seven months of contraction, while the manufacturing sector expanded for the thirteenth time after eighteenth months of contraction.
According to the Institute for Supply Management’s monthly report on business, the ISM index gained to 56.3 in August from 55.5 in July. Economists polled by Thomson Reuters predicted the index would hold at 55.5.
Construction spending slid 1.0% in July as private residential construction sharply decreased.
At the same time, June’s construction spending was revised sharply lower to a 0.8% decline from an originally reported 0.1% increase.
Economists expected July construction spending would rise 0.1%, according to the median estimate from Thomson Reuters.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable Sonoma County 6s of 2029, which traded 116 times at a high of 103.180 and a low of 99.850.
