NEW YORK — There is concrete evidence Thursday that the municipal market is already wading into the Labor Day holiday early.
Traders have noted how market participants have more than an eye toward the coming long weekend, and activity in the marketplace has started to reflect that fact. With few bid-wanteds and no new issuance of any significance expected, the municipal market has been difficult to read, a trader in New York said.
“It’s very quiet right now, with very little new issuance,” he said. “It’s really tough to get a handle on the market this morning. People will be leaving early today. Tomorrow, many people will be out. I think it’s going to be quiet for the rest of the week.”
Tax-exempt yields Thursday are mostly steady across the curve, according to the Municipal Market Data scale.
For munis, the benchmark 10-year yield on Wednesday ticked down one basis point to 2.25%. The 30-year yield remained unchanged at 3.89%.
The two-year yield held fast at 0.30% for a 16th straight session, hovering at its lowest level in more than 40 years.
Treasury yields, have started the morning firmer, much as they did Wednesday before ending the session higher. The 10-year benchmark yield slid three basis points to 2.21%.
The 30-year yield ticked down two basis points to 3.59%. The two-year yield fell two basis points to 0.19%.
“Maybe after Labor Day, next Wednesday or Thursday, you’ll get a better idea of what the direction of the market will be,” the trader said.
By this point in the week, new issuance isn’t expected to improve. And while it’s typically low for the week preceding Labor Day, this week has been disappointing, but not surprising. According to industry estimates, municipal bond sales for this week should total a paltry $1.2 billion, compared to a revised $4.4 billion last week.
In economic news, the Labor Department reported Thursday that initial jobless claims fell by 12,000 to 409,000 in the week ended Aug. 27. Continuing claims slid to 3.735 million in the week ended Aug. 20.
Economists polled by Thomson Reuters predicted 410,000 initial claims and 3.665 million continuing claims.
In addition, the Institute for Supply Management reported Thursday that the overall economy grew for the 27th straight month, while the manufacturing sector expanded for the 25th month.
According to the ISM’s monthly report on business, the ISM index slipped to 50.6 in August from 50.9 in July. Economists polled by Thomson Reuters estimated the index would slip to 48.5.
