The municipal market strengthened Thursday morning, brushing off the decline in the initial jobless claims number announced this morning.
Yields for bonds maturing in four to 12 years fell as much as two basis points, and yields for 13- to 40-year maturities declined between one and three basis points.
"No, I have not seen the market react to the initial jobless claims number," a trader in Pennsylvania said. "Certainly the market is firm this morning, there have been a bunch of trades this morning."
The initial jobless claims report showed a 26,000 decline to 319,000 from last week, a level below analysts' predictions of 330,000 claims.
A trader in New York said that some of this morning's strength may still be coming from Federal Reserve Chairwoman Janet Yellen's testimony on Wednesday that the Fed would only raise policy rates when it's confident that the economy and inflation are under control.
"Overall, there was a little bit of carryover today from Yellen's speech yesterday," he said.
The initial claims report shows that the four-week moving average is still high at 324,750 because of higher jobless claim the previous two weeks. This number is approximately 10,000 higher than the four-week moving average of 316,250 at this time last month.
The trader in Pennsylvania believes that underlying economic data and Yellen's words indicate the economy is not strong enough to decrease investors' demand for fixed income.
"The economics don't look great, inflation is very low, and growth is sub what [the Fed] expected," he said.
Barclays Capital priced $239.9 million of tax allocation refunding bonds for the successor agency to the Inland Valley Development Agency Thursday. Yields on $146.2 million of non-alternative minimum tax bonds ranged from 4.09% with a 5.25% coupon in 2037 to 3.97% with a 5% coupon in 2044. There is a term bond in 2037 and two in 2044.
The $93.7 million of federally taxable bonds' yields ranged from 2.745% in 2018 to 5.50% in 2033. There is a make whole call at T +35.
Both bond series are callable at par in 2024 and are rated A-minus by Standard & Poor's.
Piper Jaffray will bring $128.2 million of Kansas USD 480 Liberal School District refunding and improvement bonds to the market Thursday. The bonds mature serially from 2015 to 2039 and are rated A1 by Moody's Investors Service and A-plus by S&P.
There are no deals over $100 million slated for the competitive market Thursday.
Munis strengthened Thursday morning, with yields on bonds on the intermediate part of the curve falling as much as two basis points, while those maturing beyond 2027 slipped as much as three basis points. The short-end of the curve was steady, according to the Municipal Market Data triple-A scale.
Treasuries were mixed Thursday morning, with the 10-year benchmark jumping two basis points to 2.62% and the two-year notes falling one basis point to 0.41%. The 30-year remained at 3.40% from Wednesday's market close.
