NEW YORK — The municipal market is waiting for some trades to give investors a clearer picture Thursday.
It may have to wait for a while, as reasonable supply is so far meeting limited demand. Still, there is ample inventory, according to Municipal Market Data analyst Domenic Vonella.
“High-grade broker offerings are relatively abundant with balances from recent deals likely to provide the best color on market direction, if they trade,” Vonella said. “There are currently more reasons for participants in the market to not trade than to trade; Quarter End, Rosh Hashanah and next week’s muni supply calendar, to name a few.”
Municipal Market Data had yet to update tax-exempt yields by press time. On Wednesday, they continued their recent ascent. They rose two basis points out to three years.
Yields between four and seven years were up three to five basis points. Those from eight years to 13 years were up four to nine basis points. Yields beyond 13 years were two or three basis points higher.
The 10-year muni yield jumped nine basis points in Wednesday’s session to 2.18%. It has more than erased the rally gains that brought it to a record low of 1.97% late last week.
The 30-year yield increased three basis points on the day to 3.55%. The two-year yield moved for the first time in 10 sessions. It rose two basis points to 0.34%.
Treasury yields, though, have started the day mixed. In the past few sessions traders have seen rate increases that reversed the incredible rally at the intermediate and longer parts of the curve last week.
The benchmark 10-year Treasury yield increased two basis points to 2.01%. The two-year yield inched up one basis point to 0.27%.
The 30-year yield, which plunged as much as 53 basis points last week, firmed two basis points to 3.06%.
The market expects a slight decline in new supply for this week, after a substantial boost in issuance last week. This week, the market expects an estimated $6.83 billion in new supply. Last week saw a revised $7.86 billion of volume.
In economic news, the Labor Department reported Thursday that initial jobless claims fell to 391,000 on a seasonally adjusted basis for the week ending Sept. 24. Continuing claims fell to 3.729 million for the week ending Sept. 17.
Initial claims haven’t been this low since the week ending April 2, when they were 385,000. Continuing claims haven’t been this low since the week ending July 30, when they were 3.695 million.
Economists polled by Thomson Reuters predicted higher numbers for both. They estimated 420,000 initial claims and 3.730 million continuing claims.
Also, the Commerce Department reported Thursday that real gross domestic product expanded 1.3% at an annual rate. It was the third estimate for the second quarter.
Second-quarter GDP was revised up 0.3 percentage points from the second estimate in August. The revision brings it back in line with the initial estimate.
Upward revisions to personal consumption, a downward revision to imports, and an upward revision to exports account for the overall increase, the report noted.
In addition, consumer spending rose 0.7%. This represents an increase of 0.3 percentage points from the previous estimate last month. The Core PCE price index, excluding food and energy, was 2.3%.
The results were higher than estimates. Economists Thomson Reuters polled predicted GDP would be revised to 1.2 % and the core PCE price index revised to 2.2%.
