A positive employment report Friday morning dragged down bond prices, capping what has been a week-long risk on trade and higher fixed income yields.
“It’s weaker again,” a New York trader said. “People are hitting some bids, but there are bids out there.”
By afternoon, trading activity started to quiet down, although trades were still weaker.
“It’s pretty rough” a Chicago trader said. “Bids are hard to find out there. Most people are just calling it a week and agreeing to take another look in a new week.”
The muni market traded softer, following Treasuries, after non-farm payrolls surged 236,000 and beat economists’ expectations. The unemployment rate fell 0.2 percentage points to 7.7%.
On Friday, municipal bond market scales ended weaker for the fifth session.
Yields on the Municipal Market Data triple-A GO scale ended as much as eight basis points higher. The 10-year yield jumped five basis points to 1.99% while the 30-year yield increased six basis points to 3.08%. The two-year closed at 0.31% for the 14th straight session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale also closed as much as eight basis points higher. The 10-year yield jumped six basis points to 1.99% while the 30-year yield soared seven basis points to 3.15%. The two-year was steady at 0.33% for the ninth session.
Treasury yields jumped Friday, extending losses into its fifth trading session. The benchmark 10-year yield spiked up seven basis points to 2.06% while the 30-year yield climbed six basis points to 3.26%. The two-year yield rose one basis point to 0.27%.
Looking to next week, the market can expect $8.18 billion, up from this week’s revised $6.33 billion. That includes $6.62 billion from the negotiated market and $1.56 billion from the competitive calendar.
And over $2 billion of the supply will come from California. “California should be pretty well received based on block sizes and depending on if it’s priced nicely to historical levels,” said Steve McLaughlin, senior vice president at R. Seelaus & Co. “California paper in general has performed well for some time. In New York, the New York Empire deal should garner interest from many market participates based on its block size and rating.”