NEW YORK – The California municipal market was weaker Tuesday amid light to moderate secondary trading activity.
Traders said tax-exempt yields were weaker by six to eight basis points in 10 years, and three to five basis points higher on the longer end.
“There is significant weakness in the 10-year sector,” a trader in Los Angeles said. “I’m not really seeing that anywhere else on the curve, but 10-year debt could be off as much as 10 basis points. Past that, I’m seeing it weaker by maybe five basis points at most. There’s some trading, but the focus is on the primary.”
Municipal Market Data's triple-A scale yielded 2.48% in 10 years Tuesday, up nine basis points from Monday’s 2.39%, while the 20-year scale yielded 3.43%, up six basis points from Monday’s 3.37%. The scale for 30-year debt increased four basis points to 3.81% from 3.77% Monday.
Yields hit a generational low in the late summer at the crest of a powerful rally, with the benchmark triple-A 10-year muni yield bottoming at 2.17% on Aug. 25. Yields then backed off about 20 basis points in early September, and have all but stalled since then. The 10-year yield's increased a total of three basis points throughout last week before holding flat Monday.
Monday’s triple-A muni scale in 10 years was at 93.7% of comparable Treasuries and 30-year munis were at 96.4%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 106.5% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Tuesday. The benchmark 10-year note was quoted recently at 2.64% after opening at 2.56%. The 30-year bond was quoted recently at 4.00% after opening at 3.91%. The two-year note was quoted recently at 0.40% after opening at 0.36%.
In economic data released Tuesday, the consumer confidence index climbed to 50.2 in October from an upwardly revised 48.6 last month. The September index was originally reported as 48.5.
Economists polled by Thomson Reuters predicted the index would be 49.0.
Activity in the California new-issue market was light Tuesday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable Sonoma County 6s of 2029, which traded 60 times at a high of 102.000 and a low of 98.900.
