Prices of top-rated municipal bonds were higher at mid-session, according to traders, with yields on some maturities down by as much as four basis points after the release of the April employment report.
Meanwhile, traders were looking ahead to next week's new issue slate. About $8.4 billion of new supply is slated to come to market next week, according to estimates from Ipreo and The Bond Buyer. This compares to a revised $6.6 billion that priced this week, according to Thomson Reuters.
Secondary Market
Muni prices were higher at midday after the release of the April jobs data.
The unemployment rate fell to 5.4% last month from 5.5% in March while non-farm payrolls rose 223,000. Economists polled by IFR Markets correctly predicted the jobless rate decline to 5.4% but had forecast a rise of 280,000 in non-farm payrolls for April. The March report was revised downward to show non-farm payrolls rose 85,000 instead of the increase of 126,000 initially reported.
The yield on the 10-year benchmark muni general obligation was down from two to four basis points from 2.21% on Thursday, while the yield on the 30-year GO was off from one to three basis points from 3.15%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices moved higher as the yield on the two-year Treasury note decreased to 0.56% from 0.63% on Thursday, while the 10-year yield declined to 2.12% from 2.19% and the 30-year yield dropped to 2.87% from 2.92%.
The 10-year muni to Treasury ratio was calculated on Thursday at 101.3% versus 99.5% on Wednesday, while the 30-year muni to Treasury ratio stood at 108.3% compared to 106.6%, according to MMD.
Primary Market
There are $7 billion of negotiated deals set for next week while bonds scheduled for competitive sale total $1.4 billion. This compares to a revised $3.52 billion of negotiated deals and $3.08 billion of competitive offerings that sold this week.
Leading off next week's calendar is the Salt River Project Agricultural Improvement and Power District, Ariz.'s $833 million of electric system revenue bonds, scheduled to be priced by Goldman, Sachs on Wednesday. The issue is rated Aa1 by Moody's Investors Service and AA by Standard & Poor's.
Siebert Brandford Shank is set to price the state of Connecticut's $500 million of Series 2015B general obligation bonds on Tuesday after a retail order period on Monday. The GOs are rated Aa3 by Moody's and AA by S&P and Fitch Ratings.
The Pennsylvania Turnpike Commission's $495.56 million of Series 2015A turnpike revenue bonds are set to be priced by Loop Capital Markets on Thursday. The issue is expected to consist of $379.92 million fix-rated Series A-1 bonds and $115.64 million of Series A-2 SIFMA floating-rate notes. The issue is rated A1 by Moody's and A-plus by S&P and Fitch.
Goldman is slated to price Austin, Texas' $404 million of electric utility system revenue refunding bonds on Tuesday. The issue is expected to consist of $323 million of tax-exempts and $81 million of taxable. The bonds are rated A1 by Moody's and AA-minus by S&P and Fitch.
The Las Vegas Valley Water District, Nev., is set to come to market with $388.12 million of Series 2015 A, B and C limited tax GO refunding bonds. JPMorgan is slated to price the bonds on Wednesday. The issue is rated Aa1 by Moody's and AA-plus by S&P.
Frost Bank is slated to price the San Antonio Independent School District, Texas' $307.44 million of Series 2015 unlimited tax school building and refunding bonds on Tuesday. The bonds, which are backed by the Permanent School Fund guarantee program, are rated triple-A by Moody's and Fitch.
In the competitive arena, the Santa Clara Unified School District, Calif., is selling two separate offerings totaling $243.45 million on Thursday. The issues are comprised of $140.7 million of Series 2015 election of 2014 GO refunding bonds and $102.75 million of Series 2015 GO refunding bonds. Both sales are rated AA by S&P.
Also on Thursday, Milwaukee will sell a $166.11 million single issue consisting of $137.54 million Series 1015 N2 GO promissory notes and $28.57 million of Series 2015 B3 GO corporate purpose bonds. The issue is rated AA by Fitch. Milwaukee will also sell a separate issue of $125 million Series 2015 R1 revenue anticipation notes. The RANs are rated F1-plus by Fitch.
The Week's Most Actively Quoted Issues
Puerto Rico and California names were among some of the most actively quoted issues in the week ended May 8, according to data released by Markit.
On the bid side, the Puerto Rico commonwealth GO 5s of 2041 were quoted by 10 unique dealers. On the ask side, the California Department of Water and Power revenue 5s of 2044 were quoted by 13 dealers. And among two-sided quotes, the Puerto Rico commonwealth GO 8s of 2035 were quoted by nine dealers, Markit said.
The Week's Most Actively Traded Issues
Among some of the most actively traded issues in the week ended May 8, were issuers from Maryland, Massachusetts, and Chicago, according to Markit.
In the revenue bond sector, the Maryland Health and Higher Educational Facilities Authority 4s of 2041 were traded 185 times. In the GO bond sector, the Massachusetts 4s of 2038 were traded 188 times. And in the taxable bond sector, the Chicago Board of Education 6.519s of 2040 were traded 37 times, according to Markit.
Tax-Exempt Bond Funds See Outflows
Municipal bond funds which report weekly posted $211.078 million of outflows in the week ended May 6, after experiencing inflows of $481.253 million in the week ended April 29, according to the latest Lipper data.
The four-week moving average remained positive at $79.627 million in the latest week after being in the green at $124.194 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also saw outflows, losing $396.088 million in the latest week, after experiencing inflows of $304.651 million in the previous week.
High-yield muni funds recorded an outflow of $308.950 million in the latest reporting week, after seeing inflows of $104.189 million in the previous week. Exchange-traded funds, however, had inflows of $21.243 million, after recording inflows of $80.295 million in the previous week.
In contrast, long-term municipal bond mutual funds posted $1.042 billion of inflows in the week ended April 29, according to the Investment Company Institute. ICI reported of inflows of $683 million into long-term funds in the previous week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $3.295 billion to $12.977 billion on Friday. The total is comprised of $4.047 billion competitive sales and $8.930 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,541 trades on Thursday on volume of $13.692 billion.
The most active bond, based on the number of trades, was the Erie, Pa., Series 2015B general obligation 3 5/8s of 2030, which traded 172 times at an average price of 99.331 with an average yield of 3.625%. The bonds were initially priced at 97.169 to yield 3.87%.
