Market Post: Munis Mostly Flat As Traders Prepare For Weekend

The tax-exempt market looked steady to weaker Friday morning in what has been a mixed week.

Munis were steady to weaker in the beginning of the week before strengthening Thursday.

"Munis are steady," a New York trader said. "Nobody is hitting bids."

Munis were weaker Friday morning, according to the Municipal Market Data scale. Yields inside four years were steady while yields outside five years rose as much as three basis points.

On Thursday, the 10-year tax-exempt yield held steady at 1.66% for the fourth consecutive session, closing above its record low of 1.60% set July 26. The two-year was steady at 0.29% for the sixth consecutive session. The 30-year muni yield fell one basis point to 2.84%, finishing five basis points above its record low of 2.79% set July 25.

Treasuries were much weaker on better-than-expected July jobs numbers. The benchmark 10-year yield spiked up nine basis points to 1.57% while the 30-year yield jumped 11 basis points to 2.66%. The two-year yield increased one basis point to 0.25%.

In economic news, July non-farm payrolls increased 163,000 to beat analyst expectations, but the jobless rate also increased to 8.3%.

"Job creation in July posted its strongest showing in five months and the revisions to the prior two months were minor, which should go some way to alleviating fears that the U.S. economy is slipping toward recessionary territory," wrote economists at RDQ Economics. "However, the more volatile household survey took a dimmer view of the labor market and reported that the unemployment rate edged up to 8.3%. This makes the report something of a mixed bag for the Fed and keeps open the question as to whether the Fed will announce a new easing program at its September 12-13 FOMC meeting."

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER