NEW YORK – The California municipal market was slightly weaker Thursday amid light to moderate secondary trading activity.
The Municipal Market Data triple-A 10-year scale rose three basis points Thursday to 2.99%, the 20-year increased two basis points to 4.28%, and the scale for 30-year bonds climbed five basis points to 4.75%.
In the daily MMD commentary, Randy Smolik wrote “whereas yesterday's late-day fade in treasuries caused most muni players to be on hold, today's continued Treasury selling caused muni customer selling to increase and dealers to turn more flexible on offerings.”
Smolik wrote that the selling pressure was evident from roughly six years and longer.
“One should note that primary issuance is showing some life for the coming week, which could have encouraged some of the selling today,” Smolik wrote. “Some refunding deals are adding to the supply now that ratios to taxables and yields have plummeted over the past month.”
Thursday’s triple-A muni scale in 10 years was at 83.8% of comparable Treasuries and 30-year munis were at 102.6% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 107.5% of the comparable London Interbank Offered Rate.
The Treasury market was weaker Thursday. The benchmark 10-year note was quoted recently at 3.57% after opening at 3.46%. The 30-year bond was quoted recently at 4.63% after opening at 4.56%. Meanwhile, the two-year note was quoted recently at 0.78% after opening at 0.69%.
In economic data released Thursday, Initial jobless claims dropped 20,000 to 368,000 for the week ending Feb. 26, the lowest level since May 2008, while the four-week moving average fell below 400,000 for the first time since July 2008.
Continuing claims fell to 3.774 million for the week ending Feb. 19, the lowest level since October 2008.
Economists expected 395,000 initial claims and 3.800 million continuing claims, according to the median estimate from Thomson Reuters. Initial claims for the week ending Feb 19 were revised to 388,000 from 391,000 reported last week.
U.S. nonfarm productivity increased 2.6% in the fourth quarter of 2010, unrevised from the initial estimate, while output and hours worked were revised lower.
Unit labor costs, a ratio of hourly compensation to labor productivity, declined 0.6% for the quarter ending Dec. 31, also unrevised from last month's initial estimate.
Workers' output was revised lower to a 4.0% increase for the quarter, down from a 4.5% gain reported last month. Hours worked were also revised lower to a 1.4% increase for the quarter from 1.8% reported earlier.
Hourly compensation was revised slightly higher to a 2.0% increase from a 1.9% gain reported last month.
Economists expected the estimates from last month – a 2.6% increase in productivity and a 0.6% dip in unit labor – to hold, according to the median estimate from Thomson Reuters.
Activity in the California new-issue market was light Thursday.
Previous Session's Activity
The most actively traded security in the state yesterday insured Sacramento Municipal Utility District 5s of 2028, which traded 46 times at a high of par and a low of 98.119.
