While robust employment numbers and modest activity at the far end of the yield curve bolstered one segment of the municipal market Friday, sluggishness in the belly of the curve weakened another, yielding a mixed picture.
Tax-exempt yields appeared to rise in the 10-year portion and dip out at the long end, traders said.
The Bureau of Labor Statistics reported Friday that the U.S. November employment picture was stronger than expected. November payrolls posted gains of 203,000 nonfarm jobs, as well as a positive 8,000 net jobs revision for October.
What's more, the unemployment rate fell to 7.0%, or 0.25 point less than October's number before rounding. There appears to have been little residual effect of the federal government shutdown beyond a slight slowdown in federal hiring.
The lower employment figure helped the market initially, a trader in New York said.
"We were off and we rallied back," he said. "Munis were probably off on most bonds a few basis points, but it was in very slow going. Some [zero-coupon bonds] out on the long end of the yield curve got pretty good numbers."
Market participants were training their ears on an expected jump in issuance this week, the last expected big week of issuance before the holidays. Issuers also seek to bring deals to market before the Federal Open Market Committee meeting scheduled for Dec. 17 and 18.
Total volume for the week is expected to reach $11.33 billion, up from $6.23 billion last week, Ipreo, The Bond Buyer and Thomson Reuters numbers show.
Three issuers weigh in with deals near $1.6 billion. California's Foothill/Eastern Transportation Corridor Agency will bring two deals for more than $2 billion of refunding bonds, the Utility Debt Securitization Authority of New York has two for roughly $2.2 billion and the New York State Thruway Authority is issuing $1.6 billion.
Getting an early jump, Jefferies LLC, held the first of a two-day retail order period for $700 million of general obligation bonds in two series. The bonds, which are expected to price Tuesday, were rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
Yields in the first series, $650.1 million, ranged from 0.57% with coupons of 3.00% and 5.00% in a split maturity in 2016 to 4.48% with a 4.375% coupon in 2033. Credits maturing in 2015 were offered in a sealed bid.
Yields in the second series, $49.9 million, ranged from 0.57% with a 5.00% coupon in 2016 to3.49% with a 5.00% coupon in 2025. Debt maturing in 2014 and 2015 were offered in a sealed bid. The bonds in both series are callable at par in 2024.
Yields on the Municipal Market Data triple-A scale Friday rose as much as two basis points between six and 16 years on the curve. Bonds maturing past 22 years, though, slipped one basis point.
The benchmark triple-A 10-year yield on Friday increased two basis points to 2.76%. The 30-year slipped one basis point to 4.20%. The two-year held at 0.33% for a 16th straight session.
Yields on the Municipal Market Advisors benchmark triple-A scale ended higher modestly through different points on the yield curve.
The 10-year ticked up one basis point to 2.78%. The 30-year yield held at 4.42%, while the two-year remained at 0.37%.
Treasuries closed Friday's session narrowly higher past the front end of the yield curve. The benchmark 10-year yield fell one basis point to 2.87%, while the 30-year yield has also dropped one basis point to 3.91%. The two-year held steady at 0.31%.