NEW YORK – The California municipal market was mostly weaker Friday amid fairly light secondary trading activity.
Traders said tax-exempt yields were higher by three or four basis points on the long end and up one or two basis points inside of 20 years.
“We still have some bid-wanteds out on the long end that are applying some pressure,” a trader in Los Angeles said. “It’s keeping yields elevated out there.”
"Right now, the market's a little bit disjointed," said Tom Spalding, senior investment officer at Nuveen Investments. "I think we’re just in a transition phase. The yields are certainly generous to entice retail back I just think we need to see a little more stability."
The Municipal Market Data triple-A 10-year scale was higher by three basis points Friday to 3.38%, the 20-year scale increased four basis points to 4.61%, and the scale for 30-year bonds climbed five basis points to 4.92%.
Friday’s triple-A muni scale in 10 years was at 92.9% of comparable Treasuries and 30-year munis were at 104.0% according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 109.6% of the comparable London Interbank Offered Rate.
Treasuries were weaker Friday. The benchmark 10-year note was quoted recently at 3.65% after opening at 3.54%. The 30-year bond was quoted recently at 4.74% after opening at 4.66%. The two-year note was quoted recently at 0.77% after opening at 0.71%.
Activity in the California new-issue market was light Friday.
In economic data released Friday, nonfarm U.S. payrolls increased by a disappointing 36,000 in January as the unemployment rate dropped to 9.0%, the lowest level since April 2009, and severe winter weather affected employment in some sectors.
Private payrolls added 50,000 workers for the month, following gains of 139,000 and 128,000 in December and November respectively.
The annual benchmark revision for 2010 revised lower by 411,000 the number of nonfarm payrolls previously reported.
The winter storms across the country in January may have impacted employment and wages, specifically in the construction sector, the Labor Department said. Construction payrolls shed 32,000 jobs for the month, the largest decline since May. While some people may have lost work because of the snow storms, others who deal with clean-up or repairs may have been added to payrolls, the Labor Department said.
Payrolls in the transportation and warehousing sector fell by the largest amount in a year. Manufacturing payrolls added 49,000.
Economists expected an increase of 146,000 in total payrolls and 155,000 in private payrolls, according to the median estimate from Thomson Reuters. Economists said the unemployment rate would increase to 9.5%.
Previous Session's Activity
The most actively traded security in the state yesterday was San Juan Unified School District 5s of 2028, which traded 60 times at a high of 97.161 and a low of 93.525.
