NEW YORK – The California municipal market was slightly weaker Thursday amid light to moderate secondary trading activity.
“It definitely feels weaker,” a trader in San Francisco said. “I think you can safely say that we’re off a good two basis points, maybe three in spots. We’ve just been seeing yields slowly tick higher every day, and I’m not sure that’s really going to change any time soon.”
The Municipal Market Data triple-A scale yielded 2.38% in 10 years Wednesday, up four basis points from Wednesday’s 2.34%, while the 20-year scale edged up one basis point to 3.29%, up from Wednesday’s 3.28%. The scale for 30-year debt yielded 3.70%, one basis point higher than Wednesday’s 3.69%.
The 20-year scale reached a record low of 3.27% Tuesday before weakening Wednesday and Thursday. Yields on the 10-year and 30-year triple-A scale bottomed out at 2.17% and 3.67%, respectively, on Aug. 25.
Thursday’s triple-A muni scale in 10 years was at 94.8% of comparable Treasuries and 30-year munis were at 100.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 110.8% of the comparable London Interbank Offered Rate.
The Treasury market showed some losses Thursday. The benchmark 10-year note was quoted recently at 2.52% after opening at 2.50%.
The 30-year bond was quoted recently at 3.69% after opening at 3.68%. The two-year note was quoted recently at 0.44% after opening at 0.43%.
In economic data released Thursday, U.S. economic growth in the second quarter was revised upward to a seasonally adjusted 1.7% annual rate from the previous 1.6% estimate, due to stronger inventory and consumer spending, the Commerce Department reported Thursday.
This was the third and final estimate for gross domestic product in April, May, and June. The 1.7% growth rate compares with the 3.7% pace recorded in the first quarter. Quarterly economy growth has averaged an annualized rate of 1.7% the past 10 years.
Core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, was revised lower to a 1.0% growth pace from the 1.1% rate reported last month. It was the smallest core PCE increase since the first quarter of 2009.
Economists estimated GDP would increase 1.6% in the quarter and core PCE would expand 1.1%, according to the median estimate from Thomson Reuters. The Commerce Department’s first estimate for third-quarter GDP will be released Oct. 29
Initial jobless claims fell 16,000 to 453,000 filings the week ending Sept. 25 from 469,000 the previous week, the Labor Department reported Thursday. Continuing claims fell 83,000 to 4.457 million in the week ending Sept. 18.
Economists had expected 460,000 initial claims and 4.480 million continuing claims, according to Thomson Reuters.
The Chicago Purchasing Managers’ Business Barometer rose to 60.4 in September from 56.7 in August, the National Association of Purchasing Management-Chicago said Thursday.
The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters predicted a 55.9 reading for the indicator.
Activity in the California new-issue market was light Thursday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable California BABs 7.95s of 2036, which traded 71 times at a high of 110.700 and a low of 107.350.
