The market for tax-exempt municipals remained mostly steady even after a government report this morning showed jobless claims declined last week, traders said.
"We backed off a little bit this morning but we're trading in a range I would categorize as somewhat stable," Howard Mackey, a vice chairman at Rice Financial in New York, said in an interview. "There is a fair amount of pent-up demand in the sector as we firm in the muni market."
On Wednesday, Federal Reserve Chairman Ben Bernanke spoke to the House Financial Services Committee about the Fed's current monetary policy, prompting some buying and firming of yields in the municipal market. He repeated his testimony to the Senate Banking Committee Thursday. Earlier Thursday, the government said jobless claim fell by 24,000 to 334,000 in the week ending July 13.
"Overall lowered claims would tend to be a bearish signal for our market, so you have a slight weakness today in Treasuries, but not much. There was somewhat of a knee jerk reaction in Treasuries but nothing substantial," Mackey said.
Another trader in New York echoed this sentiment, saying the market jumped around after the initial claims report but has been very quiet even with a fair amount of bids wanted.
Treasury yields climbed slightly along the far end of the curve, with the benchmark 10-year yield up one basis point from the end of day Wednesday to 2.51%. The two-year yield remained steady at 0.31%, while the 30-year yield climbed two basis points to 3.59%.
Tax-exempt yields started Thursday mostly unchanged, according to one market gauge. Yields were steady between one and eight years. Those with yields between nine year and 19 years climbed as much as a basis point, and yields 20 years and beyond saw a jump of as much as two basis points.
Most of this week's fairly heavy calendar of new issuance already priced, but still remaining, is institutional pricing of Miami-Dade County water and sewer system revenue refunding bonds. The Morgan Stanley managed $496.9 million deal was priced for retail Wednesday, with yields ranging from 4.11% with a 5.00% coupon in 2027 to 4.72% with a 5.00% coupon in 2037.
In other negotiated deals, Citigroup Global Markets Inc. is expected to bring to market a $448 million San Francisco International Airport bonds.
