NEW YORK – Most of the deals scheduled for pricing in the primary market this week had been marketed by Thursday morning, forcing attention to turn to the secondary market. After steady to weaker munis on Monday and Tuesday, the market started to firm on Wednesday and looked to continue that trend Thursday.
“We are trading some new issues coming back to the street,” a New York trader said.
Munis were slightly stronger Thursday morning, according to the Municipal Market Data scale. Yields inside seven years were steady while yields outside eight years fell as much as two basis points.
On Wednesday, The 10-year and the 30-year yields each fell two basis points to 1.89% and 3.18%, respectively. The two-year was steady at 0.32% for the ninth straight session.
Treasuries were weaker after mixed sessions all week. The benchmark 10-year yield jumped two basis points to 1.62% while the 30-year yield increased one basis point to 2.72%. The two-year was steady at 0.30%.
In the negotiated market, Wells Fargo Securities is expected to price $100.2 million of Richmond, Va., general obligation taxable bonds.
In economic news, the consumer price index fell 0.3% in May after a flat reading in April. Core consumer prices, which exclude food and energy, rose 0.2% in May after a 0.2% increase in April.
The 0.3% drop in consumer prices was larger than the 0.2% drop economists had predicted. The 0.2% increase in core prices was right on the mark.
“Falling energy prices are providing significant short-term relief both to the consumer and to headline inflation rates and this rate is now below the Fed’s target rate,” wrote economists at RDQ Economics. “However, today’s data of slightly elevated readings on jobless claims and a sub-2% inflation rate will add to the arguments of those who would seek to extend Operation Twist at next week’s FOMC meeting.”
In other economic news, seasonally adjusted initial jobless claims rose 6,000 to 386,000 in the week ending June 9 while continuing claims fell to 3.278 million for the week ending June 2.
The 386,000 of initial claims was above the 375,000 claims economists had expected. The 3.278 million of continuing claims was also above the estimated 3.270 million.
“The jobless claims data remain consistent with moderate growth in employment with the latest readings similar to those seen in mid-April or around the turn of the year,” wrote RDQ economists. “We read these data as suggesting that there has been no significant pickup in layoffs. If layoffs are not rising significantly, the key to job creation is new hiring and, unfortunately, these data do not give us much insight into job creation. Next week’s initial claims data align with the survey period for the June employment report but, at this point, the evidence does not point to a strong bounce-back in payroll growth.”
