The municipal bond market on Friday was looking ahead to next week's new issue supply.
Prices of top-quality municipal bonds were stronger along with Treasuries at midday after the release of the December employment report showed gains of 252,000 non-farm payrolls and the unemployment rate declining to 5.6%.
Primary Market
The market is looking ahead to over $7 billion of new issue supply next week, comprised of about $6 billion negotiateds and $1 billion competitives, up from about $4 billion this week.
Topping the negotiated calendar is the New York City Transitional Finance Authority's $750 million building aid revenue bonds expected to be priced by Ramirez & Co. on Wednesday after a two-day retail order period.
The largest competitive sale is the Orange County Sanitation District, Calif.'s $131 million wastewater refunding obligations, going up for bid on Tuesday.
Secondary Market
Prices of top-quality municipal bonds were stronger at mid-session. The yield on the benchmark 10-year general obligation was up as much as two basis points from 1.91% on Thursday, while the yield on 30-year GOs was up from one to three basis points from 2.71%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Friday, with the two-year note yield falling to 0.55% from 0.61% on Thursday. The 10-year yield declined to 1.96% from 2.02%, while the 30-year yield decreased to 2.55% from 2.60%.
The 10-year muni to Treasury ratio was at 94.6% on Thursday compared to 96.4% on Wednesday, while the 30-year muni to Treasury ratio was at 104.4% versus 106.0%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,903 trades on Thursday on volume of $11.939 billion. Most active on Thursday, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 185 times with an average price of 102.542 and an average yield of 3.925%.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $1.338 billion of inflows in the week ended Jan. 7, after seeing outflows of $9.414 million in the previous week, according to the latest Lipper data. The four-week moving average remained positive at $649.675 million in the latest week after being in the green at $489.142 million in the prior week. A moving average is an analytical tool used to smooth price moves by filtering out fluctuations.
Long-term muni bond funds saw inflows of $821.434 million in the latest week, compared to outflows of $267.407 million in the previous week. High-yield muni funds recorded inflows of $336.200 million, after seeing outflows of $64.769 million in the prior week. Exchange-traded funds had inflows of $158.198 million, after seeing inflows of $55.834 million in the previous week.
