NEW YORK - The bid side in municipals was little changed at midday while in the new issue market Rogers School District No. 30, Ark., sold $84 million refunding and construction bonds
Treasuries moved lower while equities rose. Governments came under pressure when October consumer confidence rose to 81.1 from an upwardly revised 77.0 reading in September, originally reported as 76.8. Earlier, September durable goods orders rose 0.8% versus a revised decline of 0.1% in August, previously reported as a 0.9% drop. Excluding transportation, orders rose 1.2%, compared with a revised 0.7% increase in August, which originally was reported as a 0.3% loss.
Jim Glassman, senior U.S. economist at J.P. Morgan Securities, said the durable goods orders report indicated strong capital spending, which boded well for future economic growth.
"It looks like there is a really strong up-trend taking place and orders are growing faster than shipments which means the backlog of work to do in the future is building," he said.
However, the market is already used to strong economic data and is more focused on the Federal Reserve policy-setting meeting taking place this morning, according to Glassman.
"People are a little nervous that the Fed could change the words [in the statement], which have been steady for considerable time," he said. "If we get past that hurdle and the Fed does not change anything, then the market might actually get a little lift out of that."
The Federal Open Market Committee is scheduled to announce its decision on the monetary policy at 2:15 p.m., EST.
Recently, the two-year Treasury note was quoted down 3/32 to yield 1.82%, the 10-year note was quoted down 6/32 to yield 4.29%, and the 30-year bond was quoted down 4/32 to yield 5.15%.
In the municipal arena, bid side was little changed while traders reported a one or two basis point drift on the offered side.
"People are probably a little bit more amenable to adjusting slightly than they were yesterday," a trader in Chicago said. "We are holding in with a slight drift but it certainly isn't a wholesale 'let's-get-out-of-here' kind of market."
In the new issue market, Merrill Lynch won $84 million Rogers School District No. 30, Ark., refunding and construction bonds.
Serials were reoffered at yields ranging from 2.10% in 2007 to 4.95% in 2033. Bonds due 2004 through 2006 and 2021 through 2028 were sold and not available.
Bonds due 2008 yielded 12 basis points more than Municipal Market Data's Monday triple-A yield curve scale, while bonds due 2013 yielded 17 basis points more, bonds due 2018 yielded 15 basis points more and bonds due 2033 yielded 14 basis points more.
The issue is insured by Ambac Assurance Corp.
Also, Goldman Sach won $69 million Westborough, Mass., general obligation school bonds with a low interest cost of 4.007%.
Serials were reoffered at yields ranging from 1.34% in 2005 to 4.68% in 2022. Bonds due 2004, 2007 through 2009, 2019 and 2023 were not formally reoffered.
Bonds due in 2013 yielded four basis points more than MMD's Monday triple-A yield curve scale, while a 2018 maturity yielded 10 basis points more.
The issue is rated Aa2 by Moody's Investors Service.
In the negotiated sector, Lehman Brothers tentatively priced for institutions $546 million New York City Transitional Finance Authority future tax secured bonds after a two-day retail order period, during which underwriters received roughly $100 million in retail orders.
Serials were priced to yield from 1.35% in 2005 to 4.93% in 2026. The first tranche of a 2028 maturity was priced as 4.90s to yield 4.92%, while the second tranche was priced as 5s to yield 4.95%. Bonds due in 2032 totaling $98 million were priced at par to yield 5.00%. A 2004 maturity was subject to a sealed bid.
The issue is rated Aa2 by Moody's and AA-plus by both Standard & Poor's and Fitch Ratings.
Meantime, Banc of America Securities opened the second day of a two-day retail order period on a portion of $1.5 billion California general obligation bonds ahead of institutional pricing Wednesday. Underwriters said they received more than $200 million in retail orders yesterday.
In addition, Bear Stearns is expected to price $140 million Michigan State Hospital Finance Authority revenue bonds.
Finally, after a one-week delay, a $2 billion Oregon taxable general obligation pension bond deal is expected to price sometime this week. Bear Stearns & Co. and Morgan Stanley are co-lead underwriters on the deal.
Looking ahead to new issue volume, The Bond Buyer's 30-day visible supply calendar rose $368 million to $9.71 billion. The total comprises $1.97 billion of competitive loans and $7.74 billion of negotiated new issues.
Disclosure
The Municipal Securities Rulemaking Board reported 23,525 trades Monday, comprising 10,589 separate issues. Of all bonds traded, 1,290 changed hands at least four times. Most active was Dallas Fort Worth International Airport revenue 5s of 2032, which traded 118 times hitting a high of 101.6, a low of 96.5 and an average of 98.485.
