NEW YORK – The tax-exempt market was taking a breather Friday. After a hectic week where deals were very well received and many issues were bumped up in size, traders were looking forward to the long weekend.
“It’s a little slower because of the three-day holiday,” a New York trader said. “Overall for the week, we did see a pickup in business, but today is a little quieter.”
He added the deals on this week’s calendar were “very well received for the week.” Looking ahead to next week, “it’s not a crazy amount on the calendar and it’s very manageable. There might be a lot of children around with a break from school next week so it could be a little on the quieter side.”
Munis were steady to slightly weaker on the long end Friday morning, according to the Municipal Market Data scale. Yields inside five years were steady while yields outside six years, rose as much as one basis point.
On Thursday, the two-year yield fell three basis points to 0.26%, setting a record low as recorded by MMD. The previous record of 0.29% was set Feb. 7. The 10-year yield fell one basis point to 1.82%. The 30-year yield rose one basis point to 3.22%.
Treasuries were weaker. The benchmark 10-year and the 30-year yields rose three basis points each to 2.02% and 3.17%, respectively. The two-year was steady at 0.30%.
Muni bonds have rallied so far this year, with the two-year yield falling 16 basis points from 0.42% on Jan. 3 and the 30-year yield dropping 53 basis points from 3.57%. The 10-year yield has fallen 6 basis points since the beginning on the year when it started at 1.88%.
In economic news, the consumer price index grew 0.2% in January after holding steady in December, the Labor Department said. Core consumer prices, which exclude food and energy, also rose 0.2% in January after rising 0.1% in December.
The CPI came in below analysts’ expectations. Economists had predicted a 0.3% climb. Core consumer prices came in right at economists’ expectations of a 0.2% rise.
“Although the gain in headline CPI was less than expected in January, core inflation pressures continue to build,” wrote economists at RDQ Economics. “Core inflation pressures in January were relatively broad-based and we believe core CPI inflation will run at 2.5% for 2012 as a whole.”