The municipal market was unchanged to slightly firmer Friday amid light to moderate secondary trading.
“For such a quiet week, it’s a fairly atypical Friday,” a trader in New York said. “It’s not like we’re setting the world on fire or anything today, but there is some decent activity, people are getting some deals done. The early part of this week, you could hear a pin drop out there. People are coming off the sidelines today a bit, mostly based on what’s going on with Treasuries, but we’ve also got a pretty decent calendar coming next week, so we should see people putting some money to work.”
“There is actually some decent activity out there, at least for a Friday,” a trader in Los Angeles said. “Treasuries are rallying, and we’re following to some degree, at least in the belly of the curve. The really short end is pretty flat, and the long end is maybe a basis point or two better, but we’re probably a good three better in the belly.”
The Treasury market showed gains Friday. The benchmark 10-year finished at 3.46% after opening at 3.53%.
The 30-year Treasury finished at 4.34% after opening at 4.42%. The two-year note yield finished at 0.80% after opening at 0.82%.
The triple-A scale yielded 2.92% in 10 years Friday, down three basis points from Thursday’s level, but still much stronger than the late March level of 3.09%, according to Municipal Market Data. The 20-year yield was 3.74%, one basis point lower than Thursday’s reading, while the scale yielded 4.04% in 30 years, which matched Thursday.
Thursday’s triple-A muni scale in 10 years was at 83.1% of comparable Treasuries and 30-year munis were at 90.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 94.8% of the comparable London Interbank Offered Rate.
In economic data released Friday, retail sales increased 0.4% in April, above economists’ estimates and the seventh straight monthly increase.
Retail sales excluding autos and parts increased 0.4% in April and were revised higher to a 1.2% jump from the originally reported 0.6% hike in March.
Economists polled by Thomson Reuters expected retail sales to increase 0.2% in April and for sales excluding autos to increase 0.4%, according to the median estimate.
Industrial production increased 0.8% in April. Capacity utilization increased to 73.7% in April.
Economists had expected industrial production to increase 0.6% and for capacity utilization to increase to 73.7%, according to the median estimate from Thomson Reuters.
The University of Michigan’s final April consumer sentiment index reading was 73.3, compared to the final April reading of 72.2. Economists polled by Thomson Reuters had predicted a 73.5 reading for the index.
Meanwhile, pricing information was released on the $181.6 million series of taxable Build America Bonds from Thursday’s $791.7 million sale of improvement and refunding revenue bonds by Seattle on behalf of Washington Municipal Light and Power.
In the Citi-priced deal, the BABs mature from 2021 through 2027, with term bonds in 2030 and 2040, containing a high yield of 5.57% in 2040, or 3.62% after the 35% federal subsidy.
The $596.9 million of tax-exempt bonds had a high yield of 4.00% with a 5% coupon in 2026. Yield information on the $13.3 million recovery zone series was not available by press time.