The tax-exempt market opened with a better tone Thursday than in Wednesday's weak trading session, though market participants said overall trading activity is too quiet to make a verdict in either direction.
"I haven't really seen enough trades to know today," a Chicago trader said. "There is not a lot of activity. I'd say it's stronger than Wednesday but as far as demand goes, it's not all that hot."
He added that the bid side has a better tone but trading activity has been lackluster throughout the past week. "It goes back and forth between we're too high on everything we bid or bids are way through where we're at and they don't trade anyway. We are in a deadlock."
In the primary market, Morgan Stanley is expected to price $111.9 million of Wisconsin clean water refunding bonds.
In the competitive market, Ohio is expected to auction $267 million of general obligation bonds, rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's. The first pricing consists of $198.7 million followed by $68.3 million.
On Wednesday, municipal bond market reads finished weaker for the second session.
The Municipal Market Data triple-A GO scale ended steady as much as four basis points lower. The 10-year yield and the 30-year yield jumped four basis points each to 1.85% and 2.92%, respectively. The two-year was steady at 0.32% for the third session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale ended as much as four basis points weaker. The 10-year yield rose three basis points to 1.87% while the 30-year yield increased four basis points to 2.99%. The two-year closed unchanged at 0.35% for the 13th session.
Treasuries were stronger on the short- and long-end but slightly weaker in the belly of the curve. The two-year yield fell one basis point to 0.28% while the 30-year yield dropped two basis points to 3.21%. The benchmark 10-year yield rose one basis point to 2.04%.
In economic news, initial jobless claims fell 27,000 to 341,000 for the week ending Feb. 9, compared to economists' expectations of 360,000.
"The decline in initial jobless claims thus far in 2013 has been too persistent for it to be completely written off by the usual caveats of turn-of-the-year volatility," wrote economists at RDQ Economics. "The four-week average of initial claims has held between 351,000 and 353,000 for the last four weeks, which is remarkably stable for the average and marks a move down in claims to a new lower level that has not been seen on a consistent basis since March 2008. These data suggest that the rate of job losses has slowed in early 2013, which is consistent with a modest pickup in net job creation."