Prices of municipal bonds were lower along with Treasuries, traders said, on the heels of a better-than-expected U.S. employment report.
Yields on some top-shelf munis were up as much as seven basis points at mid-session.
Secondary Market
The yield on the muni 10-year benchmark general obligation was up from five to seven basis points from 1.86% on Thursday, while the yield on 30-year GOs up from three to five basis points from 2.66%, according to a read of Municipal Market Data's triple-A scale.
Since Monday, yields on the muni 10-year have risen by 12 basis points while yields on the 30-year have risen by 16 basis points.
Treasury prices also moved lower. The two-year note yield rose to 0.63% from 0.52% on Thursday; the 10-year yield increased to 1.94% from 1.81%; and the 30-year yield rose to 2.53% from 2.42%.
On Thursday, the 10-year muni to Treasury ratio stood at 102.8%, while the 30-year muni to Treasury ratio was at 109.9%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,259 trades on Thursday on volume of $10.089 billion. Most active on Thursday, based on the number of trades, was the Indiana State Finance Authority's CWA Authority Project 2015 Series A first lien wastewater utility revenue 3/12s of 2034, which traded 116 times with an average price of 100.155 and an average yield of 3.468%.
Primary Market
Traders are awaiting next week's supply calendar and looking at rates to see how they may impact volume for the rest of February.
Muni volume for next week is estimated at $7.211 billion, according to Ipreo and The Bond Buyer. This is up from up a revised $6.921 billion this week, according to Thomson Reuters, originally forecast to come in at about $8.8 billion.
About $5.456 billion of negotiated deals are scheduled to be priced next week, while around $1.755 billion of competitive sales are slated.
Topping next week's negotiated calendar is the South Carolina Public Service Authority's $1.06 billion of revenue obligations. The deal, for Santee Cooper, is scheduled to be priced by Barclays Capital on Wednesday after a one-day retail order period on Tuesday.
Leading the competitive slate are three separate sales from Washington state totaling about $484 million. All three series will go up for competitive bidding on Tuesday and consist of $133.48 million Series R-2015H general obligation refunding motor vehicle fuel tax bonds; $172.27 million Series R-2015G GO refunding various purpose bonds, and $177.865 million Series R-2015F GO refunding motor vehicle fuel tax bonds. Washington was just in the market last month, when it sold about $1 billion of bonds.
Also on tap are the $300 million Pennsylvania Higher Education Facilities Authority's fixed-rate revenue bonds for the Thomas Jefferson University to be priced by the Bank of America Merrill Lynch on Thursday after a one-day retail order period on Wednesday.
And the Maryland Department of Transportation plans a competitive sale of $280 million consolidated transportation bonds on Wednesday.
Tax-Exempt Bond Funds Report More Inflows
Municipal bond funds which report weekly posted $589.132 million of inflows in the week ended Feb. 4, after seeing inflows of $892.528 million in the week ended Jan. 28, according to the latest Lipper data.
The four-week moving average remained positive at $735.354 million in the latest week after staying in the green at $922.473 million in the prior week. A moving average is an analytical tool used to smooth out price moves by filtering out fluctuations.
Muni bond funds have experienced inflows in each week of 2015, according to Lipper data. Inflows totaled $771.234 million in the week ended Jan. 21; $688.522 million in the week ended Jan. 14; and $1.338 billion in the week ended Jan. 7, a two-year high.
Long-term muni bond funds saw inflows of $373.103 million in the latest week, after inflows of $549.093 million in the previous week.
High-yield muni funds recorded inflows of $164.196 million in the latest reporting week, after inflows of $207.914 million in the prior week.
Exchange-traded funds had inflows of $166.656 million, after reporting inflows of $91.239 million in the previous week.
In contrast, long-term municipal bond mutual funds saw $1.297 billion of inflows in the week ended Jan. 28, according to the Investment Company Institute.
ICI reported that inflows into muni funds were $1.045 billion in the week ended Jan. 21, $968 million in the week ended Jan. 14 and $1.326 billion in the week ended Jan. 7.
Tax-Exempt Muni Money Market Funds See $1.2B Outflow
Tax-exempt money market fund saw assets fall by $1.215 billion to $259.643 billion in the week ended Feb. 3, according to The Money Fund Report, a service of iMoneyNet.com. In the previous week, funds saw outflows of $1.523 billion as assets fell to $260.858 billion.
The average, seven-day yield for the 396 weekly reporting tax-exempt money funds held steady at 0.01% for the 92nd week in a row.
The total net assets of the 992 weekly reporting taxable money funds fell $10.159 billion to $2.447 trillion in the week ended Feb. 3, after seeing a decline of $6.992 billion to $2.457 trillion in the prior week.
The average seven-day yield for the taxable funds was unchanged at 0.02% for the third straight week -- after spending 87 weeks at 0.01%.
Overall the combined total net assets of the 1,388 weekly reporting money funds declined by $11.374 billion to $2.707 trillion after experiencing a loss of $8.519 billion to $2.718 trillion in the previous week.
