NEW YORK – The municipal market was unchanged to slightly weaker Friday amid fairly light secondary trading.
“There’s a bit of weakness, but there isn’t a whole lot of movement,” a trader in San Francisco said. “We’re down maybe a basis point or two in spots, but it’s quiet.”
Traders said the market has shown little reaction Congress’ failure to include an extension of Build America Bonds past its Dec. 31 expiration date in the tax compromise bill released late Thursday, though BABs have traded tighter Friday, according to trades reported to the Municipal Securities Rulemaking Board.
A dealer sold to a customer New Jersey Turnpike Authority BAB 7.102s of 2041 at 6.84%, down five basis points from where they were sold Thursday. Bonds from an interdealer trade of California BAB 7.95s of 2036 yielded 7.56%, four basis points lower than where they traded Thursday. Bonds from an interdealer trade of Port Authority of New York and New Jersey 5.647s of 2040 yielded 6.05%, down three basis points from where they traded Thursday.
The Municipal Market Data triple-A scale yielded 3.01% in 10 years Friday, up two basis points from Thursday’s 2.99%, matching its highest level since 3.01% on Nov. 18, while the 20-year scale increased two basis points to 4.25%, its highest since 4.26% on July 6, 2009. The scale for 30-year debt yielded 4.61%, matching Thursday’s level.
“It’s a touch weaker, but I’m getting a lot of paperwork done today, let’s put it that way,” a New York trader said.
Friday’s triple-A muni scale in 10 years was at 91.2% of comparable Treasuries and 30-year munis were at 104.3%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 112.2% of the comparable London Interbank Offered Rate.
The Treasury market was weaker Friday. The benchmark 10-year note was quoted recently at 3.32% after opening at 3.20%. The 30-year bond was quoted recently at 4.43%, after opening at 4.40%. The two-year note was quoted recently at 0.64% after opening at 0.62%.
In economic data released Friday, import prices jumped 1.3% in November, as both fuel and non-fuel imports rose, while export prices surged 1.5%.
Fuel import prices rose 3.7% -- after rising at a revised 3.8% rate the previous month -- driven by a 4.1% rise in petroleum prices which more than offset a 3.8% drop in natural gas prices, Labor said.
Import prices excluding fuel increased 0.8% and prices excluding petroleum increased 0.7%.
Economists expected overall import prices would rise 0.8%, according to the median estimate from Thomson Reuters.
The University of Michigan's preliminary December consumer sentiment index reading was 74.2, compared to the final November 71.6 reading.
Economists polled by Thomson Reuters had predicted a 72.5 reading for the index.
Activity in the new-issue market was light Friday.
Visible Supply
The Bond Buyer's 30-day visible supply rose $4.194 billion to $16.025 billion. The total is comprised of $2.055 billion of competitive bonds and $13.970 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 60,098 trades of 18,243 issues for volume of $20.20 billion. Most active was Missouri Health & Educational Facilities Authority 6.875s of 2040 that traded 970 times at a high of par and a low of 98.500.
