NEW YORK — Municipal bond yields have been falling Friday, particularly heading farther out along the curve. But the market has seen sparse activity on the day.
A lackluster jobs report released by the Labor Department got the Treasury market rolling early. Rumbles from Greece are helping it along its downward path.
But munis, lacking a strong calendar and heavy trading for price discovery, or much retail involvement, are following Treasuries, albeit at a slower pace.
“It’s quiet,” a trader in California said. “The market is firm. There’s some spotty trading on the upside, based upon orders … maybe people trying to get ahead of next week.”
Tax-exempt yields are rallying, falling across all but the front end of the curve crossing noon, according to the Municipal Market Data scale. For maturities between 2016 and 2017, yields are flat to three basis points lower. Yields with maturities between 2018 and 2020 have fallen four to six basis points. Those for maturities beyond 2020 are five to 10 basis points lower.
The benchmark 10-year yield on Thursday ticked down one basis point to 2.24% to end the day. The 30-year yield also dipped a basis point to 3.88%.
The two-year yield remained unchanged at 0.30% for a 17th straight session, hovering at its lowest level in more than 40 years.
“The market has moved up a lot,” the trader said. “They’re looking to bump MMD pretty considerably. At first glance, I don’t know that the cash market is as strong as the MMD bumps out there. We could all get back next week and find a lack of paper.”
Treasury yields, after rallying most of Thursday, continued to fall across the middle and back end of the curve heading into Friday afternoon. The 10-year benchmark yield has fallen nine basis points to 2.05%.
The 30-year yield has dropped 13 basis points to 3.37%. The two-year yield, though, has ticked up two basis points to 0.21%.
New issuance volume scheduled is expected to rise during the holiday week. Industry estimates place the total for next week at $2.99 billion, versus a pathetic $1.72 billion that came to market this week.
The Labor Department reported Friday that U.S. employers added no jobs in August, shocking market expectations and leaving the unemployment rate unchanged at 9.1%.
Piling on, the numbers for July and June were revised downward by 58,000 jobs, showing a weaker labor market than economists perceived up to now. Total private payrolls were up 17,000, the smallest increase in 18 months.
The equities markets, accordingly, have had a rough outing, thus far. The major indexes are all down to start the day by at least 1.82% from Thursday’s close. The Dow Jones Industrial Average is down 209 points.
