Municipal bonds traders were lethargic Friday as a bleak new issuance calendar this month has failed to inspire investors, market participants said.
"It's remarkably quiet, with not a lot of customer bids out," one trader on the west coast said. "I think everybody's looking for bonds that seem to make some sense. Nobody seems to want to sell or really be buying at this point."
With just $3.53 billion in volume this week, there hasn't been much to trade. Potential volume next week is estimated to be even lower with $2.65 billion scheduled.
"As we look forward it's going to be extremely quiet and there's a holiday week after that, so the expectation is it will be steady as it goes until we get some direction either way," the trader said.
Yields on some muni bonds dipped Friday morning as most remained steady, even as the U.S. Labor Department reported weak employment gains.
"We've had a very muted reaction to the jobs number," the trader said. "Treasuries are a little bit better as the jobs report is showing some weakness. We don't have a strong growth story out there and without that, rates on bonds are likely to remain where they are."
Yields on bonds maturing in 2015 and 2018 to 2044 were down as much as one basis point, according to Municipal Market Data's AAA scale. Other bonds were steady.
Treasuries firmed Friday, with the 30-year yield falling one basis point to 3.66%, while the 10-year slid four basis points to 2.67%. The two-year yield fell by three basis points to 0.31%.
"Despite some recent disappointing economic releases, we expect Fed policy to remain on the current path of reducing [quantitative easing]," US Bank Wealth Management said in a report this week. "In our view, U.S. economic data, and in particular the labor market, would have to show sustained weakness before policy makers would respond by pausing tapering."
