NEW YORK — Although activity is understandably sparse, there is enough to show a slightly weaker municipal market at the long end Friday. But the weakness is mostly a function of few bids and little overall interest, said a lone trader manning his firm’s desk in New Jersey.
“We’re seeing a little weakness here, given that the holidays are coming,” he said. “Treasuries are off here. The long bond is off about a point. It’s very quiet.”
The Municipal Market Data scale’s morning read appeared to agree with the trader’s assessment that the market has a slightly weaker feel on the long end. Muni yields are steady out to 24 years. Beyond that, they are flat to one basis point higher.
Muni yields ended Thursday’s session steady to slightly firmer. The benchmark 10-year yield fell two basis points to 1.91%, a new record low as recorded by MMD, besting the previous low of 1.92% set Monday.
The two-year yield closed flat at 0.36% for its 12th consecutive session. The 30-year muni yield fell two basis points to 3.62%.
Treasury yields as they have for most of the week, continued to weaken through Friday morning. The benchmark 10-year yield has climbed four basis points to 2.00%. The two-year yield inched up one basis point to 0.29%. The 30-year yield has risen five basis points to 3.04%.
Potential primary market volume for next week is estimated to total just $5.9 million, against $3.97 billion for this week. There are also a few competitive note sales worth a total of about $21 million scheduled for next week.
The difference? There are no muni bond sales scheduled for the negotiated side of the market next week. This week saw a revised $3.43 billion sold.
All of next week’s bond action will center on three deals in the competitive space next week, which total $5.9 million. That compares with $537.4 million this week.
The approaching holidays haven’t kept investors from putting money into municipal bond mutual funds. In the week ended Dec. 21, muni bond funds saw roughly $764 million of inflows from funds that report their flows weekly, according to Lipper FMI.
In the week ended Dec. 14, there were net inflows of almost $460 million. The numbers mark the third straight week of strong inflows.
High-yield muni funds also saw a third straight week of inflows after two straight weeks of outflows. Funds that report weekly saw inflows of $72.4 million, Lipper said. The previous week, high-yield funds reported inflows of $90.5 million.
In economic news, the Commerce Department reported Friday that new orders for manufactured durable goods leapt $7.5 billion, or 3.8%, to $207.0 billion. It marked the largest gain since July, when new orders increased 4.2%. New orders were unchanged in October.
Excluding transportation, new orders climbed 0.3%. Excluding defense, they rose 3.7%.
Economists polled by Thomson Reuters had estimated a 2.0% increase in new orders for durable goods. They had projected that durable goods excluding transportation would gain 0.4% in November.
The Commerce Department also reported Friday that personal income increased $8.5 billion or 0.1% in November. It represents the smallest increase since August, when it was down 0.1%.
The gain followed on the heels of a 0.4% increase in October and was less than the median 0.2% increase that economists polled by Thomson Reuters had estimated.
In November, personal spending rose 0.1%. That followed a 0.1% gain in October.
Economists projected there would be a median 0.3% increase in personal spending in November.
