After a strong day for global fixed-income assets Wednesday, the municipal market paused Thursday morning to reassess its footing.
Traders said municipal bonds took a rest in morning trading as Treasuries weakened.
"It seems like munis are taking a bit of a breather," a New York trader said, following a huge global fixed-income rally Wednesday. "I wouldn't say munis are weaker. They are steady, but it's not like Wednesday where everyone was buying everything."
In the primary market, Siebert Brandford Shank & Co. is expected to price for institutions $461.4 million of New York's Metropolitan Transportation Authority bonds, following a retail order period Wednesday. The bonds are rated A2 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
In retail pricing, yields on the first series, $350 million of transportation revenue bonds, ranged from 0.50% with a 4% coupon in 2014 to 3.51% with a 5% coupon in 2042. Credits maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.
Yields on the second series, $111.4 million of transportation revenue bonds, ranged from 0.92% with a 5% coupon in 2016 to 2.58% with a 5% coupon in 2023. The bonds are callable at par in 2022.
On Wednesday, the Municipal Market Data scale was much stronger. The 10-year yield dropped eight basis points to 1.63% while the 30-year yield fell seven basis points to 2.74%. The two-year finished steady at 0.30% for the 30th consecutive trading session.
Treasuries were weaker Thursday after a big rally Wednesday. The benchmark 10-year yield jumped six basis points to 1.68% while the 30-year yield increased two basis points to 2.84%. The two-year yield rose one basis points to 0.27%.
In economic news, the September trade deficit was smaller than expected at $41.5 billion from the expected $45 billion. Imports gained $3.4 billion but exports jumped $5.6 billion. The trade deficit was also down from August's $43.8 billion.
"From a GDP accounting perspective, the trade gap was significantly narrower than assumed by the Commerce Department and this should add about 0.4 percentage points to the revision to third-quarter GDP," wrote economists at RDQ Economics. "Bigger picture and through the monthly volatility, real imports grew moderately during the third quarter, however, exports were weak as a result of economic conditions in Europe and parts of Asia."
In other economic news, initial jobless claims fell 8,000 to 355,000 for the week ended Nov. 3. Unemployment claims averaged 370,000 in October after 376,000 in September. Continuing claims fell 135,000 to 3.127 million for the week ended Oct. 27.
"The Labor Department cited mixed impacts from Hurricane Sandy with the inability to file affecting claims in some areas and disruptions boosting claims in others," RDQ economists wrote. "On balance, initial filings appear to have been held back by hurricane-related disruptions in the latest week. We expect, however, that claims will be boosted by the storm in the coming weeks and it will be several weeks before we are able to get a clean reading on the underlying level of jobless claims."