The tax-exempt market took a breather Thursday morning as most of the week's deals were already priced.
After a choppy trading session Wednesday in Treasuries, muni buyers sat on the sidelines. "It's slow and there are not many buyers at the moment," a New York trader said. "It should pick up with June 1 cash flow but it's about steady and quiet now. People might be in holiday mode already."
In the primary, Goldman, Sachs & Co. is expected to price $162 million of Louisiana general obligation refunding bonds, rated double-A by the rating agencies.
Barclays should price $117 million of Massachusetts Housing Finance Agency housing bonds, rated double-A-minus by the rating agencies.
Yields on the Municipal Market Data scale were as much as two basis points weaker Wednesday. The 10-year and 30-year yields increased two basis points each to 1.86% and 3.04%, respectively. The two-year held steady at 0.28% for the 10th session.
The Municipal Market Advisors 5% scale showed yields rising as much as four basis points. The 10-year and 30-year yields increased three basis points each to 1.93% and 3.15%. The two-year yield held steady at 0.33% for the ninth consecutive session.
Treasuries were slightly stronger Thursday morning after a selloff Wednesday stemming from Federal Reserve Board Chairman Ben Bernanke's speech. The two-year and benchmark 10-year yields slid one basis point each to 0.25% and 2.02%, respectively. The 30-year yield dropped two basis points to 3.19%.
In economic news, initial jobless claims fell 23,000 to 340,000 in the week ended May 18. Claims fell more than the 346,000 expected by economists.
Continuing claims fell 112,000 to 2.912 million for the week ending May 18, compared with the 3.000 million claims expected by economists.
"The decline in jobless claims in the latest week and the steadiness of the four-week average of claims in recent weeks should reassure that job growth has not slowed in May," wrote economists at RDQ Economics. "This report aligns with the May payroll survey week and the four-week average of claims is 22,000 below the average for the April job survey week. Fed Chairman Bernanke's testimony yesterday reaffirmed the importance of sustained improvement in the labor market as a precondition to tapering asset purchases and this report is consistent with such an improvement. We believe that by September, the FOMC will have seen enough evidence of firming labor market conditions to modestly pull back on bond purchases."
In other economic news, new home sales rose 2.3% to 454,000 in April, larger than the 425,000 pace projected by economists.
"The market for newly constructed housing continued to improve early in the second quarter," RDQ economists wrote. "April new home sales were 29% above year-ago levels and transaction prices increased almost 15%."
