The municipal market was slightly firmer yesterday with tax-exempt yields lower by about two basis points overall."There is a bit of a firmer tone out there, but there isn't a whole lot going on," a trader in New York said. "Some business is getting done, a few bits and pieces here and there, but we're fairly quiet. I'd say we're probably better a couple basis points, closer to two basis points overall, maybe three on the long end, at most. But it's quiet."

"There's not a whole lot to speak of, but we did probably pick up a couple basis points out on the long end," a trader in Los Angeles said. "We're just not seeing a whole lot of activity. We're getting pretty close to the end of the week, the long weekend, and I think people are mostly just going to be staying on the sidelines until we get back next week."

The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 3.45%, was quoted near the end of the session at 3.37%. The yield on the two-year note was quoted near the end of the session at 0.92% after opening at 1.02%. The yield on the 30-year bond, which opened at 4.20%, was quoted near the end of the session at 4.19%.

As of Monday's close, the triple-A muni scale in 10 years was at 86.8% of comparable Treasuries, according to Municipal Market Data, while 30-year munis were 105.5% of comparable Treasuries. As of the close Monday, 30-year tax-exempt triple-A general obligation bonds were at 108.6% of the comparable London Interbank Offered Rate.

In the new-issue market yesterday, the San Francisco Public Utilities Commission competitively sold $375 million of water revenue bonds to JPMorgan with a true interest cost of 4.54%. The bonds mature from 2011 through 2032, with a term bond in 2039. None of the bonds were formally re-offered. The bonds, which are callable at par in 2019, are rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's.

RBC Capital Markets priced for retail investors $186.3 million of state facilities refunding bonds for Ohio. Bonds from the larger $89.8 million series mature in 2010, and from 2013 through 2024. Yields range from 0.65% with a 2% coupon in 2010 to 3.43% with a 5% coupon in 2019. Bonds maturing from 2020 through 2024 were not formally re-offered.

Bonds from a $79.7 million series mature from 2010 through 2024, with yields ranging from 0.75% with a 2% coupon in 2010 to 3.43% with a 4% coupon in 2019. Bonds maturing from 2020 through 2024 were not formally re-offered. Bonds from the smaller $16.8 million series mature from 2013 through 2024, with yields ranging from 1.86% with a 3% coupon in 2013 to 4.03% with a 4% coupon in 2024. All the bonds are callable at par in 2019, and are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch Ratings.

Fort Worth competitively sold $85.2 million of general purpose bonds to JPMorgan with a TIC of 3.73%. The bonds mature from 2010 through 2029 and were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.

Fort Worth also competitively sold $55.6 million of combination tax and limited surplus revenue certificates of obligation to RBC with a TIC of 3.48%. The bonds mature from 2010 through 2029, with yields ranging from 0.55% with a 3% coupon in 2010 to 4.45% with a 4.375% coupon in 2029. The bonds are callable at par in 2019.

Morgan Keegan & Co. priced $45.7 million of water and sewer refunding and improvement bonds for Winter Park, Fla. The bonds mature from 2010 through 2018 with term bonds in 2024, 2029, and 2034. Yields range from 1.10% with a 3% coupon in 2010 to 5.00% priced at par in 2034. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's and AA-minus by Standard & Poor's.

Southwest Securities priced $28.9 million of unlimited-tax school building bonds for the Texas City Independent School District. The bonds mature from 2010 through 2030, with yields ranging from 0.70% with a 3% coupon in 2010 to 4.59% with a 4.5% coupon in 2030. The bonds, which are callable at par in 2019, are rated AA by Standard & Poor's.

Morgan Stanley priced $26 million of waterworks system revenue bonds for Owen County, Ky. The bonds mature in 2039, yielding 5.63% priced at par. The bonds, which are callable at par in 2019, are rated Baa2 by Moody's and BBB-plus by Standard & Poor's.

Pennsylvania's Cheltenham Township School District competitively sold $17.7 million of general obligation bonds to UBS Financial Services. The bonds mature from 2010 through 2018. The bonds, which are callable at par in 2015, were not formally re-offered. The credit is rated AA-minus by Standard & Poor's.

In economic data released yesterday, spending on construction projects slid 0.2% to a seasonally adjusted annual rate of $958 billion in July as private construction increased 0.1%, and public construction fell 0.7%. The overall decrease, which compares to the 0.1% decrease projected by Thomson Reuters, followed a revised June level of $959.5 billion, a 0.1% rise from the prior month.

Pending home sales increased 3.2% to a reading of 97.6 in July from 94.6 in June. Thomson Reuters' poll of economists had predicted a 96.1 reading.

According to the Institute for Supply Management's monthly report on business, the ISM index gained to 52.9 in August from 48.9 in July. Economists polled by Thomson Reuters predicted the index would rise to 50.5.

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