NEW YORK – Activity in the tax-exempt market may not be up to pre-holiday levels, but traders are participating just enough to push munis firmer.
Throughout the week, “it seemed like sell-side activity was still at holiday-week levels,” said a trader in New York.
In Thursday morning trading, munis were firmer on the long end, according to the Municipal Market Data scale. Yields inside the 10-year were steady. The 11-year and 12-year yields fell one and two basis points, respectively. Yields on the 13-year to 22-year fell between one and three basis points while the 23-year yields and beyond fell two basis points.
On Wednesday, the two-year finished flat at 0.42%. The 10-year yield closed steady at 1.88% and the 30-year finished at 3.57%, also unchanged from the prior session.
Treasuries were strengthening across the curve Thursday morning. The two-year yield fell one basis point. The benchmark 10-year yield and the 30-year yield fell three basis points each to 1.96% and 3.01%, respectively.
In the primary market, Thursday is expected to be the most active day, with two of the four negotiated deals on the calendar coming to market.
RBC Capital Markets is expected to price $170.6 million of Board of Regents of Texas Tech University system revenue financing and system refunding and improvement bonds. The credit is rated AA by Fitch Ratings.
RBC is also expected to price $1.25 million of Fayette County, Ohio, building improvement refunding building bank qualified bonds.
On the competitive calendar, Texas A&M University Board of Regents is expected to auction $65 million of bonds, and Suffolk County Water Authority will sell $83.64 million of revenue bonds.
In economic news, seasonally adjusted jobless claims fell 15,000 to 372,000 for the week ended Dec. 31, the Labor Department said. The drop in claims was a slightly larger decline than expected; Economists had predicted a 375,000 reading.
“The jobless claims data continue to point to a pickup in the pace of job creation although we are entering a period where volatility around year-end has made claims a less reliable indicator,” wrote economists at RDQ Economics. “The four-week average of claims has now been below 400,000 for eight consecutive weeks and continues to decline. This suggests that the pace of job separations has slowed and suggests a pickup in net job creation. We believe that the balance of risks lies to the upside of what was already an above-consensus projection for job growth.”
