A somewhat weaker tone pervades the municipal market Thursday as the remainder of the week's issuance arrives.
Both primary and secondary markets show moderate activity to clear paper, but lack direction, traders said.
"The primary market looks quiet this morning and slightly weaker," a trader in Texas said.
Illinois paper continues to perform well in the secondary market Thursday an Illinois trader said. Yields on paper maturing between 20 and 30 years have strengthened about 20 basis points from Wednesday.
On Tuesday, the state's General Assembly passed proposed legislation to restructure pensions. Spreads for both Chicago and Illinois general obligation paper tightened Wednesday by 10 to 35 basis points, according to Interactive Data.
"Illinois bonds are still reacting to the news," the trader said. "They've been stronger each day."
Strong economic news Thursday has also factored into the market's tone, traders reported. The Commerce Department reported that gross domestic product numbers showed a larger-than-expected upward adjustment, to 3.6% growth, representing a 0.8-point improvement from the preliminary report and greater than average revision.
Additionally, the Department of Labor reported that unemployment claims decreased 23,000 during the Nov. 30 Thanksgiving holiday week to 298,000.
The department claims analyst said the latest reading should be taken with caution as weekly readings demonstrate more volatility than normal, making seasonally adjusting claims around a major holiday difficult to measure.
The markets await Friday's important November payroll numbers.
New issuance this week should easily top that of the holiday week just past; potential volume is expected to total $6.55 billion, up from $652.2 million last week, according to industry estimates.
In the negotiated market, Bank of America Merrill Lynch priced $494.5 million of Washington, D.C., general obligation bonds. The bonds are rated Aa2 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Yields ranged from 0.33% with coupons of 2.00% and 4.00% in a split maturity in 2015 to 4.15% with a coupon of 5.00% and 4.25% priced at par in a split maturity in 2030. The bonds are callable at par in 2023.
Ramirez & Co., Inc. priced $351.1 million of Nassau County, N.Y., taxable general improvement bonds, one series of bond anticipation notes and two series of tax anticipation notes.
The three series of notes, totaling $350 million, all mature in 2014 with 2.00% coupons. They are rated SP-1-plus by Standard & Poor's and F1 by Fitch.
The $1.1 million of taxable bonds are rated A2 by Moody's, A-plus by Standard & Poor's and A by Fitch. They mature in 2015 with a coupon of 0.75%.
Yields on the Municipal Market Data triple-A scale appear up to two basis points higher past six years on the curve Thursday. Bonds maturing between 11 and 30 years appear weakest.
The benchmark triple-A 10-year yield on Wednesday rose five basis points to 2.73%. The 30-year also climbed five basis points to 4.19%. The two-year held at 0.33% for the 14th straight session.
Yields on the Municipal Market Advisors benchmark triple-A scale ended Wednesday higher through the curve from four years out. The 10-year climbed four basis points to 2.76%. The 30-year yield rose three basis points to 4.41%. The two-year held at 0.37%.
Treasuries moved into Thursday afternoon weaker. The benchmark 10-year yield has increased three basis points to 2.86%, while the 30-year yield has inched up one basis point to 3.91%. The two-year has ticked up one basis point to 0.30%.