The tax-exempt market got off to a stronger start Thursday morning as traders in the tri-state area slowly began making their way to work and started trading again.
Thursday marked the second full day the bond markets were open after the market shutdown Tuesday and early close Monday due to Hurricane Sandy.
"Munis are trading a little bit," a New York trader said. "It's pretty flat though. But it's better than yesterday."
In the primary market, Morgan Stanley held preliminary pricing for $355.1 million of East Bay Municipal Utility District water system revenue refunding bonds, rated Aa1 by Moody's Investors Service, AAA by Standard & Poor's, and AA-plus by Fitch Ratings.
Yields ranged from 0.31% with a 1% coupon in 2014 to 2.26% with a 5% coupon in 2026. Credits maturing in 2013 were sold via sealed bid. The bonds are callable at par in 2022 except for credits maturing in 2023, which are not callable.
In the competitive market, California's Elk Grove Unified School District is expected to auction $82.88 million of revenue bonds.
On Wednesday, the Municipal Market Data scale ended flat. The 10-year muni yield and the 30-year yield were steady at 1.72% and 2.82%, respectively. The two-year remained at 0.30% for the 25th straight trading session.
Treasuries were mostly weaker as stocks climbed higher. The benchmark 10-year yield jumped two basis points to 1.71% while the 30-year yield increased one basis point to 2.88%. The two-year yield fell one basis point to 0.28%.
In economic news, jobless claims fell 9,000 to 363,000 for the week ending Oct. 27, compared to economists' expectations of 370,000.
Continuing claims rose 4,000 to 3.263 million for the week ending Oct. 20, higher than the 3.25 million economists had expected.
"Thus far in October initial jobless claims have averaged 367,000, which is lower than the 376,000 average reported for September and suggests some slowing in the pace of job losses early in the fourth quarter," wrote economists at RDQ Economics. "We suspect, however, that hiring remained lackluster in October given concerns about looming tax hikes in 2013 and we look for nonfarm payrolls to have risen only 100,000 in October."
In economic news, the Institute of Supply Management index grew to 51.7 in October from 51.5 in September. The figure beat economist expectations that the index would remain at 51.5.
"While short of any glowing upside surprises, a trifecta of U.S. economic data are at least all moving in the right direction," wrote economists at BMO Capital Markets. "We now await the big show tomorrow morning, and with all of this morning's clues in hand, there is some modest upside risk to our initial call for a 130,000 gain in October nonfarm payrolls.
