NEW YORK – The municipal market was mostly unchanged Thursday amid light to moderate secondary trading activity, pausing a string of record-low tax-exempt yields.

The flatness follows Wednesday’s rally, which dropped muni yields to all-time lows for the 12th time in the past three weeks, pushing 10-year tax-exempt yields below 2.20% and 30-year munis lower than 3.70% for the first time in history.

“We’re actually just pretty flat right now,” a trader in New York said. “It’s been fairly quiet in the secondary thus far, and there’s not a whole lot going on at the moment that’s moving the market, so we’re seeing yields hold in at yesterday’s levels.”

The Municipal Market Data triple-A scale yielded record lows of 2.17% in 10 years and 3.30% in 20 years Wednesday, following record lows of 2.17% and 3.30% Wednesday. The scale yielded 3.67% in 30 years Thursday, matching Wednesday’s all-time low of 3.67% Wednesday.

Wednesday’s levels marked the 12th all-time low in 10-year munis set in the past 14 sessions. Also, 20- and 30-year tax-exempts reached record lows for the fourth time in five sessions.

“I guess yields can’t go lower every single day,” a trader in San Francisco said. “There just wasn’t a ton trading and nothing really weighing on munis to push those yields lower. The tone is still firm, of course, but we’re just flat today.”

Thursday’s triple-A muni scale in 10 years was at 86.8% of comparable Treasuries and 30-year munis were at 104.0%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 116.5% of the comparable London Interbank Offered Rate.

The Treasury market mostly showed some gains Thursday. The benchmark 10-year note was recently at 2.50% after opening at 2.54%.

The 30-year bond was recently quoted at 3.54% after opening at 3.57%. The two-year note was at 0.53% after opening at 0.52%.

The Treasury Department auctioned $29 billion of seven-year notes, with a 1 7/8% coupon, a 1.989% high yield, a price of 99.26. The bid-to-cover ratio was 2.98. The Federal Reserve banks bought $710.0 million for their own account in exchange for maturing securities.

The iShares S&P National AMT-Free Bond Fund sli pped 7 cents this afternoon, to $107.13. The $2.16 billion fund,  which seeks to replicate returns on the S&P National AMT-Free Municipal Bond Index, has returned 8% this year, including 2.2% in August.
In the new-issue market Thursday, Austin, Texas competitively sold $79.5 million of public improvement bonds to First Southwest Co.

The bonds mature in 2011 and from 2013 through 2030. Yields range from 0.37% with a 3% coupon in 2011 to 3.66% with a 3.5% coupon in 2030.

The bonds, which are callable at par in 202, are rated triple-A by all three major ratings agencies.

Bank of America Merrill Lynch priced $46.4 million of taxable Build America Bonds for Polk County, Fla.

The BABs mature in 2040, yielding 5.935% priced at par, or 3.86% after the 35% federal subsidy. The bonds were priced to yield 237.5 basis points over 30-year Treasuries and are callable at par in 2020.

The credit is rated Aa3 by Moody’s Investors Service, A-plus by Standard & Poor’s, and AA-minus by Fitch Ratings.

Kentucky’s Campbell County Sanitation District No. 1 competitively sold $42.3 million of revenue refunding bonds to Raymond James & Co.

The bonds mature from 2011 through 2029, with a term bond in 2031. Yields range from 0.35% with a 2% coupon in 2011 to 3.84% with a 4% coupon in 2031.

The bonds, which are callable at par in 2020, are rated Aa2 by Moody’s and AA by Standard & Poor’s.

Also, Barclays Capital priced $38.2 million of airport revenue refunding bonds for North Carolina’s Raleigh-Durham Airport Authority. The bonds mature from 2028 through 2031, with yields ranging from 3.65% with a 5% coupon in 2028 to 4.08% with a 4% coupon in 2031.

The bonds, which are callable at par in 2020, are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.

In economic data released Thursday, initial jobless claims decreased 31,000 to 473,000 for the week ending Aug. 21, dropping for the first time in four weeks.

Continuing claims fell to 4.456 million, the lowest level since June.

Economists expected 500,000 initial claims and 4.478 million continuing claims, according to the median estimate from Thomson Reuters.

Visible Supply
The Bond Buyer’s 30-day visible supply fell $1.757 billion to $5.462 billion. The total is comprised of $1.428 billion of competitive bonds and $4.034 billion of negotiated bonds.

Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,955 trades of 16,232 issues for volume of $17.06 billion. Most active was California’s Sonoma County taxable 6s of 2029 that traded 196 times at a high of 103.250 and a low of 98.706.

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