NEW YORK – The tax-exempt market is ending the week on a strong note after firming all week. Buyers also continue to push the muni market higher ahead of a smaller new-issue calendar next week.
Munis were firmer again Friday morning after strengthening all week, according to the Municipal Market Data scale. Yields inside three years were steady while four- to 21-year yields fell one and two basis points. Outside 22 years, yields dropped between one and three basis points.
On Thursday, the two-year yield closed flat at 0.31% for the 12th consecutive trading session while the 10-year also finished steady at 1.85%. The 30-year fell three basis points to 3.19%.
Treasuries continued to gain as yields fell to their lowest this week. The benchmark 10-year yield dropped four basis points to 1.89% while the 30-year yield fell two basis points to 3.09%. The two-year was steady at 0.27%.
Looking to next week, the municipal market expects $6.06 billion in new deals, down from this week’s revised $6.55 billion. On the negotiated calendar, $4.18 billion is expected, down from this week’s revised $5.8 billion. In competitive deals, $1.88 billion is expected to come to market, up from this week’s revised $752.7 million.
In economic news, non-farm payroll employment rose 115,000 in April as the unemployment rate fell to 8.1%. The 115,000 gain in April followed a 154,000 increase in March, while unemployment fell from 8.2% in March.
“Despite the perception that payrolls appear to be slowing because of the initial print, the three-month change in non-farm payrolls is modestly ahead of the 12-month change,” wrote economists at RDQ Economics. “Each of the last four payroll reports have revised the previously reported gain in private employment higher by an average of 45,000 per month. The unemployment rate also continues to decline as labor force participation dropped again in April.”
They added, “In short, through the volatility, the job market continues to expand and slack in the labor market continues to be reduced at a gradual pace. There is nothing here to persuade the Fed that it should be looking at the need for further stimulus.”
