The tax-exempt market continued to post gains Thursday, even as Treasuries drifted weaker, on steady demand.
"I'm a little surprised by the strength that has continued in munis," an Atlanta trader said. "I thought we'd take a rest but we are seeing good activity today. It has died down a little but earlier today people were coming in on new offerings and grabbing them."
He added he is looking to the $212.1 million triple-A rated Mecklenburg County, N.C., deal as an indicator of market strength. "It should be priced right on the Municipal Market Data scale."
In the primary market, Jefferies & Co. is expected to price for institutions $805 million Metropolitan Transportation Authority's Triborough Bridge and Tunnel Authority refunding bonds, following retail pricing Wednesday. The bonds were expected to price this past December, but were postponed due to market conditions.
The sale includes $625 million of subordinate bonds, rated A1 by Moody's Investors Service, A-plus by Standard & Poor's and Fitch Ratings, and AA-minus by Kroll Bond Rating Agency.
The sale also contains $180 million of senior bonds, rated Aa3 by Moody's, AA-minus by Standard & Poor's and Fitch, and AA by Kroll.
Wells Fargo Securities is expected to price the Mecklenburg GO refunding bonds.
Piper Jaffray should price $149 million of North Orange County Community College District, Calif., taxable GOs, rated Aa1 by Moody's and AA by Standard & Poor's.
In the competitive market, the Florida Department of Transportation is expected to auction $293.7 million of revenue bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's.
The MMD scale ended stronger Wednesday for the third consecutive session. The 10-year yield dropped four basis points to 1.69% while the 30-year yield fell three basis points to 2.80%. The two-year yield dropped two basis points to 0.34%.
Treasuries were weaker after posting gains earlier in the week. The benchmark 10-year yield jumped five basis points to 1.91% while the 30-year yield increased four basis points to 3.10%. The two-year yield increased one basis point to 0.26%.
In economic news, initial jobless claims rose 4,000 to 371,000 for the week ending Jan. 5. Continuing claims fell 127,000 to 3.109 million for the week ending Dec. 29, the lowest level since July 2008.
"Although initial jobless claims have risen for four consecutive weeks, this was from an exceptionally low level in early December and the four-week average of claims is still around where it was in the middle of October," wrote economists at RDQ Economics. "Our reading of the labor market remains that involuntary job separations continue to run at a relatively low rate and the key to job creation will be new hiring."