The tax-exempt market ended the week on a steady tone as yields were unchanged for four consecutive trading sessions.
Munis were flat despite Treasuries trading weaker on better-than-expected economic data. Traders noted the market was on hold Friday as they waited for the upcoming $11 billion in new issuance expected to hit the market.
“The market might be following Treasuries weaker slightly, but not really,” a San Francisco trader said. “Periodically I see a couple spots where guys are wanting to do something a couple basis points cheaper but not much.”
He added trading has started to slow. “I’m just not seeing a lot of action in the secondary or anything worth buying given these levels.”
With next week expected to see an uptick in primary issuance, this trader said he hopes that will help loosen up spreads in the secondary. “Hopefully the big primary will bring stuff out in the secondary if people are all focused on new issues.”
In the primary market Friday, Citi priced for retail $850 million of New York City general obligation bonds, rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings. A second retail order period is expected Monday followed by institutional pricing Tuesday. Pricing details were not available by press time.
In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.
Yields on Buckeye, Ohio, Tobacco Settlement Financing Authority 5.75s of 2034 fell three basis points to 6.65% while California Statewide Communities Development Authority 5s of 2042 fell two basis points to 3.10%. Yields on Mount Diablo, Calif., Unified School District 5s of 2032 fell one basis point to 2.95%.
Still, other trades were weaker. Yields on New York City Municipal Water Finance Authority 4s of 2047 jumped six basis points to 3.18% while Ohio County, Ky., Pollution Control 6s of 2031 increased three basis points to 4.93%. Yields on Austin, Texas, Community College District 4s of 2027 rose two basis points to 2.47%.
On Friday, the Municipal Market Data scale ended steady for the fourth consecutive trading session. The 10-year yield finished flat at 1.48%, one basis point above the 1.47% record low set Nov. 28. The 30-year yield ended unchanged at 2.48%, dangling above its record low of 2.47% set Nov. 28. The two-year finished flat at 0.30% for the 50th consecutive trading session.
Treasuries ended weaker Friday on better-than-expected economic news. The benchmark 10-year yield jumped five basis points to 1.63% while the 30-year yield increased four basis points to 2.81%. The two-year was steady at 0.25%.
In economic news, the November employment report was stronger than expected as non-farm payrolls were up 146,000 and the jobless rate fell to 7.7%.
“The unemployment data are painting a brighter picture on the economy than any other data series,” wrote economists at RDQ Economics. “Our best take is that the economy is growing at a moderate rate at the end of 2012.”