The tax-exempt market opened Friday morning on a slightly stronger note, gaining from Thursday's flat trading.
"The market is OK today," a New Jersey trader said. "It's been up and down. This morning seemed softer but Treasuries did an about-face and we're firm in the muni market. The bid side is relatively strong. So we are sideways to stronger by one to two basis points."
Overall for the week, this trader said, "New issues this week were pretty well received but there was not a lot of activity."
Municipal bond market reads showed a stronger market Thursday after weakening Monday through Wednesday.
Yields on the Municipal Market Data triple-A GO scale fell Thursday. The 30-year dropped one basis point to 2.86%. The 10-year finished flat at 1.82% while the two-year closed steady at 0.34% for the fourth session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale also showed steady to lower yields Thursday. The 10-year yield and the 30-year yield finished steady at 1.84% and 2.94%, respectively. The two-year held steady at 0.35% for the fourth session.
Treasuries were stronger Friday morning. The benchmark 10-year yield and the 30-year yield dropped four basis points to 1.93% and 3.13%, respectively. The two-year yield fell two basis points to 0.26%.
In economic news, January payrolls came in about as expected, and were up 157,000 while the unemployment rate rose 0.1-point to 7.9%.
"The employment recovery continues and these data serve to remind us not to reach hasty judgments on economic growth," wrote economists at RDQ Economics. "Although the increase in employment in January was only moderate there were two sets of upward revisions to jobs in 2012. First, payroll growth in November and December was revised up by a net 127,000. Second, the level of employment in March 2012 was revised up by 424,000 reflecting annual benchmark revisions."
They added that, "As a result, total employment is now estimated to have risen by 2.2 million in 2012 following a 2.1 million increase in 2011. We would characterize this as fairly steady growth. The unemployment rate ticked up to 7.9% on a weaker take on jobs from the household survey but labor force participation held steady at 63.6%. In 2013, demographics arguably provide a larger uncertainty factor to forecasting the unemployment rate than employment growth poses."
In other economic news, the ISM index climbed to 53.1 in January from 50.2 in December. The increase beat economists' expectations of a 50.5 reading.
"Although the guts of the report were not as strong as the headline, this is nonetheless a very solid report that shows an upswing in economic activity since November," RDQ economists wrote. "The headline activity index was the strongest since April 2012 and the orders index was the strongest since May 2012. Production and employment also showed solid gains."
They continued, "The bottom line from today's data is that the contraction in GDP in the fourth quarter appears to be a complete head fake, the economy continued to expand in the fourth quarter, and that expansion pace continued into the first quarter of 2013. As an aside, the prices paid index rose to the highest level in four months."