Municipal bonds firmed Thursday morning even as the U.S. government announced jobless claims in the week ended April 5 plunged by the most in at least 10 years.
Initial jobless claims slumped 32,000 to 300,000 in the week ended April 5, the Labor Department said Thursday, bringing the four-week average of claims down 4,750 to 316,250. Economists polled by Thomson Reuters expected 320,000 initial claims.
Both munis and Treasuries gained in value through the morning.
Yields on munis fell as much as three basis points, according to Municipal Market Data. Maturities between 2020 and 2033 strengthened the most, with bonds maturing from 2017 to 2038 gaining as much as two basis points.
"I don't really consider the week-to-week numbers so much as the larger trend," Brian Rehling, a fixed income strategist at Wells Fargo Advisors, said in an interview. "It's encouraging that we're starting to see things look better there, but I don't think it's time to say that we're out of the woods yet."
The market may instead be responding to Federal Open Market Committee minutes that preceded a rally of three basis points in the muni market Wednesday.
"I think the FOMC minutes made it clearer that things are likely be pretty dovish for a fairly long period of time," Rehling said. "I thought they were fairly dovish in terms of long-term policy, focusing the market back on the long-term."
Treasury yields also fell, with the 10-year bond sliding three basis points to 2.67% and the 30-year by two basis points to 3.55%. The two-year note was unchanged at 0.37% following a four basis-point drop Wednesday.
J.P. Morgan Securities brought to market $543.7 million of Columbia generating station electric revenue and refunding bonds late Wednesday afternoon
Yields on $517.7 million of the J.P. Morgan-led revenue and refunding bonds ranged from 0.40% with a 3% coupon in 2016 to 3.82% with a 5% coupon in 2040. The $26 million of refunding bonds were priced to yield 0.15% with a 2% coupon in 2015. The deal was rated Aa1 by Moody's, AA-minus by S&P and AA by Fitch.
Wells Fargo is scheduled to bring $500 million of Metropolitan Transportation Authority of New York transportation revenue bonds to market Thursday. There was a retail order period Wednesday. The bonds are rated A2 by Moody's, A-plus by S&P and A by Fitch Ratings.
Siebert Brandford Shank & Co. will bring a two-part deal totaling $415.5 million of lease revenue bonds on Thursday for the state of California following a retail period Wednesday.
In the competitive market, $250 million of Illinois general obligation bonds are scheduled for auction Thursday.
"The competitive Chicago GO is attractive," a trader in Chicago said in an interview Monday.
With reporting from Maria Bonello and Hillary Flynn
