The market for tax-exempt municipal bonds was slow Thursday afternoon, as some market participants said bond prices remained unattractively high.
"There's very little going on, we're having trouble getting anything today," one California-based trader said in an interview. "Personally I think they're expensive right now. I don't really like what I'm seeing. Looking forward to tomorrow to see what happens with non-farm payrolls and we'll see what that is."
Yields on bonds were steady throughout the curve, according to Municipal Market Data's AAA 5% scale. The yields on bonds in a Standard & Poor's Dow Jones Indices index tracking investment-grade bonds have fallen 33 basis points so far this year to 2.78%, SPDJI said in a report Thursday.
"I think it's possible that people think they're expensive, but I think that they could continue going lower," one financial advisor said in an interview. "We're not seeing a ton of deals and when they do come they usually gather quite a bit of attention and get some aggressive bidding."
Volume this week is expected to remain below $5 billion, according to Thomson Reuters data. The biggest deal of the week, $1 billion of Illinois general obligation bonds, was priced Thursday by Citigroup Global Markets Inc.
Market participants said government data tomorrow in the form of the employment situation report could move muni yields.
"Nonfarm payrolls tomorrow is the market moving number," according to Adam Buchanan, vice president of sales and trading at Ziegler. "We're going to be looking at the revised number from December because it was way off. We're going to look closely at that revision and see where it shakes out."
Nonfarm payroll employment in December grew 74,000, following an increase of 241,000 for November and a gain of 200,000 in October.
Treasuries continued Thursday weaker, with the 30-year yield gaining three basis points to 3.67%, while the 10-year jumped to 2.70%. The two-year yield rose two basis points to 0.33%.
