NEW YORK – The California municipal market was slightly weaker Thursday. Traders said tax-exempt yields rose one to three basis points in spots.
“It’s feeling somewhat weaker out there,” a trader in Los Angeles said. “We’re probably down anywhere from one to three basis points, just pretty much weakening as you go out longer. As we’ve been weakening recently, the long end has held in pretty well, but I think we’re definitely down a good two or three basis points out long today.”
The Municipal Market Data triple-A scale yielded 2.40% in 10 years and 3.34% in 20 years Thursday, following 2.39% and 3.33% Wednesday. The scale yielded 3.76% in 30 years Thursday, following 3.73% Wednesday.
In nine of the past 11 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 previous 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 Aug. 25. The 20-year low of 3.28% was set Aug. 31.
Thursday’s triple-A muni scale in 10 years was at 87.0% of comparable Treasuries and 30-year munis were at 95.9%, according to MMD, while 30-year tax-exempt triple-A GO bonds were at 105.3% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Thursday. The benchmark 10-year note was quoted near the end of the session at 2.76% after opening at 2.72%.
The 30-year bond was quoted near the end of the session at 3.93% after opening at 3.87%. The two-year note was quoted near the end of the session at 0.49% after opening at 0.48%.
In the California new-issue market Thursday, Morgan Stanley priced $197.8 million of limited project revenue bonds for the University of California Regents.
The bonds mature from 2011 through 2024, with yields ranging from 0.60% with a 2% coupon in 2012 to 3.42% with a 4% coupon in 2024. Bonds maturing in 2011 were decided via sealed bid.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.
In economic data released Thursday, producer prices increased 0.4% in August due to higher energy prices to post their largest gain since March, the Commerce Department reported Thursday. Core producer prices, excluding food and energy goods, rose 0.1%.
Economists expected a gain of 0.3% in producer prices and 0.1% in core prices, according to the median estimate from Thomson Reuters.
Manufacturing activity in the Philadelphia area unexpectedly contracted in September, as the general business conditions index edged upward to negative 0.7 from a previous reading of negative 7.7, according to the Federal Reserve Bank of Philadelphia monthly report on business.
Economists surveyed by Thomson Reuters predicted a positive reading of 1.5 in the report, which covers eastern Pennsylvania, southern New Jersey, and Delaware. Positive readings indicate expansion.
Initial jobless claims fell by 3,000 filings during the week ending Sept. 11 to 450,000 — the lowest level since July. Continuing claims fell to 4.485 million for the week ending Sept. 4.
Economists expected 460,000 initial claims and 4.46 million continuing claims, 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 99 times at a high of 101.996 and a low of 99.310.
