NEW YORK – The tax-exempt market continued to weaken Thursday morning for its sixth consecutive session as traders have decided to sit back and wait for more attractive yields before jumping into the market. Most of the larger deals in the primary market were priced earlier in the week and traders said they will now look to the secondary for direction.

“Munis seem weaker,” a New York trader said. “It’s relatively quiet but it’s definitely weaker.” He added the market is “muted in anticipation of the jobs report tomorrow.”

There are no big deals being priced in the primary that will steal focus, but the trader said he will look to the secondary for direction. “Puerto Rico and New York City water bonds will free up today and it will be interesting to see how they bounce in the secondary.”

Munis were weaker again Thursday morning, according to the Municipal Market Data scale. Yields inside five years were steady while six- to 20-year yields rose up to three basis points. Outside 21 years, yields jumped one and two basis points.

On Wednesday, the two-year yield ended flat at 0.26%, its record low first registered by MMD on Feb. 16. The 10-year yield jumped five basis points to 2.03%, the first time it has closed above 2.00% since Dec. 7. The 30-year yield rose one basis point to 3.30%.

Treasuries were weaker. The benchmark 10-year yield rose one basis point to 1.99% while the 30-year yield jumped two basis points to 3.14%. The two-year was steady at 0.31%.

In the primary market, Citi is expected to price $320 million of Broward County, Fla., water and sewer bonds, rated Aa2 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.

Wells Fargo is expected to price $243.3 million of New York State Thruway Authority local highway and bridge contract bonds.

Citi is expected to price Kansas City, Mo., general obligation improvement and refunding bonds, rated Aa2 by Moody’s and AA by Standard & Poor’s.

Citi is also expected to price $153 million of Williamson County, Texas, limited tax refunding bonds, rated triple-A.

In economic news, seasonally adjusted initial jobless claims rose 8,000 to 362,000 in the week ended March 3. Continuing claims rose 10,000 to 3.416 million for the week ended Feb. 25.

The initial claims were greater than the 351,000 expected by economists. Continuing claims were also greater than the 3.400 million projected.

“Despite the modest increase in initial claims in the latest week, the four-week average of claims has fallen further since the February employment survey week,” wrote economists at RDQ Economics. “For February as a whole, initial claims averaged 355,000, the lowest monthly average in four years. We continue to expect tomorrow’s employment report for February will feature a 225,000 increase in private payrolls and a 205,000 gain in total non-farm payrolls.”


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