NEW YORK – The tax-exempt market was steady Thursday morning but traders said an abundant amount of supply could force price cuts soon.
“Munis are kind of flat, but a lot busier,” a New York trader said. “There are lots of bonds around.”
“Deals that are being done are coming back to the street,” he added. “They couldn’t put them away to customers so dealers are trying to sell them. We should see some good cuts coming.”
Munis were steady Thursday morning, according to the Municipal Market Data scale.
On Wednesday, the two-year yield closed steady at 0.31% for the sixth consecutive trading session while the 30-year ended flat at 3.25% for the third consecutive trading session. The 10-year yield jumped two basis points to 1.87%.
Treasuries were stronger Thursday after weakening all week. The benchmark 10-year yield and the 30-year yield each dropped four basis points to 1.95% and 3.11%. The two-year yield fell one basis point to 0.27%.
In the primary market, Loop Capital Markets is expected to price $293.9 million of Dallas-Fort Worth International Airport joint revenue refunding and improvement bonds, rated A1 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings.
In the competitive market, Virginia Public School Authority is expected to auction $70.1 million of revenue bonds.
In economic news, seasonally adjusted initial jobless claims fell 1,000 to 388,000 for the week ending April 21. Continuing claims rose 3,000 to 3.314 million for the week ending April 14.
The 388,000 initial claims were higher than the 375,000 expected by economists. The 3.315 million claims were also higher than the 3.290 million projected.
“We have to acknowledge disappointment that the level of initial jobless claims has been somewhat elevated in the last three weeks but, at the same time, keep the extent of the rise in perspective,” wrote economists at RDQ Economics. “Using our employment models to weight the data, we would project an increase in nonfarm payrolls of 175,000 in April at this point.”