NEW YORK – The tax-exempt market was firmer, following Treasuries higher, as a flight to safety buoyed both markets. Municipal trading activity has calmed since the early morning as most traders look forward to the long holiday weekend.

“It’s been an eventful morning,” a New York trader said. “We had a big pop. Treasuries were higher so munis were two to four basis points higher in the secondary,” he said, referring to prices. “But now we have settled down a bit.”

The trader said the market will most likely stay calm through the rest of the week. “And really the beginning of this month has not been terribly exciting.”

In the primary market, he said the larger deals have been received well this week, but smaller competitive deals struggled to find sponsorship.

Munis were steady to firmer Thursday morning, according to the Municipal Market Data scale. Yields inside two years were flat while yields outside three years fell up to two basis points.

On Wednesday, the two-year yield finished steady at 0.36% for its 13th consecutive trading session while the 10-year yield and 30-year yield also finished flat at 2.16% and 3.42%.

Treasuries were firmer for the second day. The benchmark 10-year yield and the 30-year yield each fell three basis points to 2.21% and 3.34%. The two-year was steady at 0.35%.

In economic news, seasonally adjusted initial jobless claims fell 6,000 to 357,000 for the week ending March 31, the lowest level since April 19, 2008. Claims were higher than the 355,000 expected by economists.

Continuing claims fell 16,000 to 3.338 million for the week ending March 24, the lowest since August 9, 2008, when claims were 3.330 million. Continuing claims were lower than the 3.350 million expected by economists.

“The initial claims data continue to signal improvement in the labor market with the four-week average of claims at its lowest level since April 2008,” wrote economists at RDQ Economics. “Most labor market indicators point to March being stronger than the average of January and February. We believe that the economy has entered a more self-sustaining phase of the recovery with stronger job creation, which in turn we see leading to revisions in the expected date when the Fed will first hike rates.”

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