Municipal bond investors and traders are mostly holding their positions on light activity Friday as they prepare for next week's anticipated uptick in volume.
Few bonds are on offer in the secondary, a trader in North Carolina said. And those on the bid side gaze across roughly a 10-basis-point chasm from where others are offering bonds, he said.
"It's just too far away to have a conversation," the trader said. "Munis in 10 years are too rich. If you go beyond 20 years, you get more retail-friendly dollar prices on some pretty tradable names, so you have more success further out on the curve."
The market feels heavy, he added. As 10-year Treasury yields have bobbed higher in the morning and then lower crossing noon, intermediate-range muni yields have been holding a few ticks higher than Thursday's close.
"Regardless of the Treasury bounce, the muni secondary is too rich," the trader said. "Muni yields should have moved cheaper earlier this week than they have. But we'll catch up next week."
Market participants are keeping their ears trained on an expected jump in issuance next week, the last expected big week of issuance before the holidays. Issuers also seek to bring deals to market before the Federal Open Market Committee meeting scheduled for Dec. 17 and 18.
Total volume for the week is expected to reach $11.33 billion, up from $6.23 billion last week, Ipreo, The Bond Buyer and Thomson Reuters numbers show.
Three issuers weigh in with deals near $1.6 billion. California's Foothill/Eastern Transportation Corridor Agency will bring two deals for more than $2 billion of refunding bonds, the Utility Debt Securitization Authority of New York has two for roughly $2.2 billion and the New York State Thruway Authority is issuing $1.6 billion.
Economic news this week has been positive. The unemployment report followed suit.
The Bureau of Labor Statistics reported Friday that the U.S. November employment picture was stronger than expected. November payrolls posted gains of 203,000 nonfarm jobs, as well as a positive 8,000 net jobs revision for October.
The unemployment rate fell, to 7.0%, or 0.25 point less than October's number before rounding. There appears to have been little residual effect of the federal government shutdown beyond a slight slowdown in federal hiring.
Yields on the Municipal Market Data triple-A scale appear weaker by up to two basis points between six and 16 years on the curve. Bonds maturing past 21 years, though, are lower by as much as two basis points.
The benchmark triple-A 10-year yield on Thursday inched up one basis point to 2.74%. The 30-year increased two basis points to 4.21%. The two-year held at 0.33% for a 15th straight session.
Yields on the Municipal Market Advisors benchmark triple-A scale ended higher through most of the curve, from four years out.
The 10-year ticked up one basis point to 2.77%. The 30-year yield also rose one basis point to 4.42%, while the two-year held at 0.37%.
Treasuries during Friday session have mostly edged lower. The benchmark 10-year yield has slid one basis point to 2.87%, while the 30-year yield has also dropped one basis point to 3.91%. The two-year is steady at 0.31%.