NEW YORK - The municipal market was unchanged to slightly firmer Friday amid fairly light secondary trading activity.
“It’s somewhat quiet, but there is scattered firmness,” a trader in Los Angeles said. “We’re better maybe one or two basis points, more so in the intermediate sector, but you can pick up a basis point or so really anywhere along the curve depending on the credit. Still, it’s more flat than anything else, and fairly quiet.”
Municipal Market Data's triple-A scale yielded 2.51% in 10 years Friday, down two basis points from Thursday’s 2.53%, while the 20-year scale yielded 3.48%, matching Thursday. The scale for 30-year debt was also unchanged from Thursday, at 3.86%.
“We’re maybe a bit firmer in spots, but it’s flat for the most part,” a trader in New York said. “There are some bits and pieces trading, but it’s light.”
Friday’s triple-A muni scale in 10 years was at 95.8% of comparable Treasuries and 30-year munis were at 96.5%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 105.8% of the comparable London Interbank Offered Rate.
The Treasury market mostly showed gains Friday. The benchmark 10-year note was quoted recently at 2.61% after opening at 2.71%. The 30-year bond was quoted recently at 3.99% after opening at 4.05%. The two-year note was quoted recently at 0.35% after opening at 0.36%.
“Munis follow Treasuries, except when they don’t,” said Gene Gard, a portfolio manager at Dupree Funds, which runs eight tax-exempt funds with $1.2 billion in assets. “It seems like we’re for once following Treasuries as they back off a little bit. It doesn’t seem like anything systemic in the muni market.”
Activity in the new-issue market was light Friday, though secondary market trades reported by the Municipal Securities Rulemaking Board were flat to firmer.
Bonds from an interdealer trade of taxable New York State Build America Bonds 5.817s of 2031 yielded 5.90%, down one basis point from where they were sold Thursday. Bonds from an interdealer trade of Bay Area Toll Authority 5s of 2042 yielded 4.85%, even with where they traded Thursday.
Bonds from an interdealer trade of taxable Tacoma, Wash., BABs 5.041s of 2025 yielded 5.05%, even with where they traded Thursday. A dealer sold to a customer taxable New York City Transitional Finance Authority 5.882s of 2031 at 5.57%, even with where they were sold Thursday.
A dealer sold to a customer Ohio State University taxable BABs 4.91s of 2040 at 5.13%, down one basis point from where they were sold Thursday. Bonds from an interdealer trade of taxable Texas BABs 4.681s of 2040 yielded 4.95%, two basis points lower than where they traded Thursday.
Bonds from an interdealer trade of taxable Pennsylvania BABs 4.65s of 2026 yielded 4.30%, two basis points lower than where they were sold Thursday. A dealer sold to a customer taxable California BABs 7.95s of 2036 at 7.21%, even with where they traded Thursday.
In economic data released Friday, real gross domestic product rose at an annual rate of 2.0% in the third quarter, aided by consumer spending. Economists expected a 2.0% gain in GDP.
Core personal consumption expenditures, which excludes food and energy purchases, the Federal Reserve’s preferred measure of inflation, increased 0.8% on an annual basis. That level is shy of economist estimates for the quarter.
The employment cost index used to track overall labor costs rose 0.4% during the 12-month period ending in September, after increasing 0.5% at a seasonally adjusted rate during the second quarter of 2010.
The 0.5% gain for the second quarter followed an unrevised 1.7% increase during the previous quarter, which ended in March.
The third-quarter gain was lower than the 0.5% uptick predicted by economists, according to a median estimate from Thomson Reuters.
Consumer sentiment continued to wane in October, slipping to 67.7 in the month’s final reading from a preliminary reading of 67.9, according to data Friday from the University of Michigan.
Economists predicted a 68.0 reading for the index. The October headline level compares with 68.2 in September and 68.9 in August.
The Chicago Purchasing Managers’ Business Barometer rose to 60.6 in October from 60.4 in September.
The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while levels above 50 suggests expansion.
Economists predicted a 58.0 reading for the indicator.
Visible Supply
The Bond Buyer's 30-day visible supply fell $766.4 million to $11.427 billion. The total is comprised of $2.433 billion of competitive bonds and $8.993 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,431 trades of 15,172 issues for volume of $14.47 billion. Most active was taxable New Jersey Transportation Trust Fund Authority 6.104s of 2028 that traded 236 times at a high of 103.066 and a low of 98.825.
