A small buying spree continued Thursday morning following a big rally Wednesday led by the primary market.
After yields fell around 20 basis points Wednesday, traders said the tone of the market felt stronger again.
"The market should be up again," a New York trader said. "It feels better. The 10-year area should be a good spot today. It's about five to six basis points stronger in that area."
In the negotiated market, many deals were priced Wednesday, though a few were set to come to market Thursday.
RBC Capital Markets Thursday priced $329.3 million of Phoenix, Ariz., Civic Improvement Corporation transit excise tax revenue refunding bonds, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's.
Yields ranged from 0.80% with 3% and 5% coupons in a split 2015 maturity to 2.57% with 4% and 5% coupons in a split 2020 maturity. Bonds maturing in 2014 were offered via sealed bid.
In the competitive market, South Carolina Association of Governmental Organizations is expected to auction $116.8 million of short-term notes, rated MIG-1- by Moody's.
Still, underwriters continued to postpone deals due to market conditions. RBC Capital Markets was expected to price $376 million of Bi-State Development Agency of the Missouri-Illinois Metropolitan District combined lien mass transit sales tax appropriation refunding bonds Thursday. The bonds are rated Aa3 by Moody's and AA-plus by Standard & Poor's. The deal was postponed to next week after being put on day-to-day status Tuesday.
Wednesday, yields on the MMD scale ended as much as 22 basis points lower. The 10-year yield dropped 20 basis points to 2.61% and the 30-year yield plunged 22 basis points to 3.91%. The two-year yield fell five basis points to 0.50%.
Yields on the Municipal Market Advisors 5% scale fell as much as 18 basis points. The 10-year and 30-year yields dropped 17 basis points each to 2.80% and 4.04%, respectively. The two-year yield slipped four basis points to 0.55%.
Treasuries were stronger Thursday morning for the second session. The benchmark 10-year yield dropped six basis points to 2.49% and the 30-year yield fell five basis points to 2.53%. The two-year yield fell two basis points to 0.37%.
In economic news, initial jobless claims slipped 9,000 to 346,000 for the week ending June 22, coming in just above the 345,000 expected.
"Initial jobless claims have averaged 346,000 thus far in June, which compares to an average of 351,000 in the first five months of 2013," wrote economists at RDQ Economics. "The claims data for June suggest that layoffs have not picked up. We judge the jobless claims data and consumers' perceptions of labor market conditions as being consistent with another 175,000 increase in nonfarm payrolls in June."
In other economic news, personal income rose $69.4 billion, or 0.5% in May, following a 0.1% increase in April. Income was stronger than the 0.2% rise estimated by economists. Personal spending in May climbed $29 billion, or 0.3%, after falling 0.3% in April. Spending came in at the 0.3% expected.
"Personal income was stronger than expected in May and trends in real disposable income have been quite robust in recent months, which should support consumer spending gains going forward," RDQ economists wrote. "However, from a second-quarter GDP perspective this report points to a smaller increase in PCE and GDP than we had been forecasting, mainly due to the downward revision to April real PCE. Our real GDP tracking puts us at 2% for the second quarter at this point versus our previous forecast of 2.5%."