The tax-exempt market opened quiet Friday morning as traders said limited supply is keeping activity muted.
"There is nothing going on," a Chicago trader said. "It's like Jack be quick in deals. They offer them quick and try to get rid of them. No one wants to make too big of a stance."
He added that most market participants are waiting for a big uptick in issuance or outflows from muni bond funds to help spur activity. "At this point you're trying to lay low and that seems to be the trend. We are all bored. The market is stuck right now."
On Thursday, municipal bond market scales finished steady to a few basis points stronger.
The Municipal Market Data triple-A GO scale ended flat to one basis point firmer. The 10-year yield fell one basis point to 1.84% while the 30-year yield finished steady for the second session at 2.92%. The two-year was steady at 0.32% for the fourth session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale ended mostly steady, though some yields rose and some yields fell as much as two basis points throughout the curve. The 10-year yield finished steady at 1.87% while the 30-year yield closed flat at 2.99%. The two-year closed unchanged at 0.35% for the 14th session.
Treasuries were weaker Friday morning after posting gains Thursday. The benchmark 10-year yield jumped three basis points to 2.03%. The two-year and 30-year yields increased one basis point each to 0.28% and 3.19%, respectively.
In economic news, industrial production fell 0.1% while capacity use slipped to 79.1% in January. Industrial production fell short of economists' expectations of a 0.2% increase but capacity came in above the 78.9% expected.
"Though industrial production was weaker than expected in January, there were significant upward revisions to output in prior months," wrote economists at RDQ Economics. "Also, three-month trends remain quite solid as manufactured production has risen 9.8% at an annual rate since October and business equipment production is up 14.5% on the same basis. Increases in equipment production, along with the 21% annualized increase in core capital goods orders in the fourth quarter, are an encouraging sign for business capital spending in early 2013."
