NEW YORK — The municipal market Thursday has downshifted somewhat from the past few days’ Grand-Prix race for paper.
As the market has absorbed much of the primary supply quickly, investors have been scrounging for what little in the way of quality paper remains. Still, the market feels strong, a trader in New York said.
“It’s been a little quieter today,” he said. “The market still feels firm; guys are still reaching for bonds. But most of the primary market has been going away. It’s been tough finding paper at attractive levels.”
Muni yields started Thursday’s session mostly firmer, according to the Municipal Market Data scale. They are steady through six years. Thereafter, they are flat to three basis points lower.
The benchmark 10-year yield dropped seven basis points Wednesday to 2.00%. This lowered its ratio to Treasuries to 98.51% from 106.37% two days ago, putting it firmly below 100%. It now sits close to the 2011 calendar-year average of 97.25%.
The muni-Treasury ratio has gotten richer recently, falling almost 20 percentage points in nine sessions, since Nov. 23, and almost 30 percentage points from its calendar-year high of 128.42%, achieved on Oct. 5.
The two-year yield skipped down three basis points to 0.36%. The 30-year yield fell six basis points to 3.70%.
Treasury yields have started the day with somewhat of a sluggish gait. The benchmark 10-year yield has inched up one basis point to 2.04%.
The two-year yield hovered at 0.25%. The 30-year yield also held steady at 3.07%.
“We are doing big business for the start of December,” another trader in New York said. “We’re up around 30% from last year.”
Primary market volume is expected to weigh in around the $6 billion range this week. Industry estimates for anticipated market volume total $5.82 billion, against a revised $5.88 billion last week. So far, investors anxious to put reinvestment money to work have snapped up much of the week’s supply, leaving little left over.
In economic news, the Labor Department reported Thursday that seasonally adjusted initial jobless claims fell to 381,000 for the week ended Dec. 3. This represented a 23,000 decrease from the previous week’s revised level of 404,000. It’s the lowest level since Feb. 26, when claims were 375,000.
Continuing claims fell to 3.583 million for the week ended Nov. 26. This is 174,000 less than the previous week’s revised figure of 3.757 million. It’s the lowest level since Sept. 20, 2008, when continuing claims were 3.564 million.
The initial claims number fell below the median 395,000 that economists polled by Thomson Reuters projected. And the continuing claims number arrived much lower than the median 3.700 million level they estimated.
In addition, the Commerce Department reported Thursday that sales of merchant wholesalers rose 0.9% in October to $406 billion. This followed a revised 0.3% gain the previous month.
October sales were 13.1% higher than those from the same period one year earlier. Economists polled by Thomson Reuters predicted sales for October would increase 0.5%.
