Municipals were stronger at mid-session, traders said, with yields on some maturities falling by as much as five basis points.
The yield on the 10-year benchmark muni general obligation was off two to four basis points from 2.11% on Wednesday, while the 30-year yield was three to five basis points weaker from 3.07%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mostly higher on Thursday. The two-year Treasury yield was flat from 0.87% on Wednesday while the 10-year Treasury yield decreased to 2.24% from 2.27% and the 30-year yield fell to 3.00% from 3.04%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 102.1% from 94.1% on Tuesday, while the 30-year muni to Treasury ratio stood at 104.2% compared to 101.1%, according to MMD.
MSRB: Par Amount of Munis Traded Fell 18% in Q3
The Municipal Securities Rulemaking Board released statistics for the third quarter showing the lowest par amount traded since at least 2005, when it first began collecting real-time trade data.
The amount of munis traded fell 18% to $551 billion from the $672 billion traded in third quarter of 2014.
However, the number of trades in the third quarter rose to 2.33 million, up from 2.19 million trades in the same period last year, the MSRB said.
For Wednesday, the MSRB reported 48,132 trades on volume of $14.598 billion.
Primary Market
Municipal bonds traders were looking to put most of the week's hefty primary issuance behind them on Thursday as they saw the last few deals to come to market ahead of next week's holiday-shortened session.
Citigroup price the Kentucky State Property and Buildings Commission's $115.66 million of revenue and revenue refunding bonds from Project No. 110.
The issue was priced to yield from 0.22% and 0.42% with 2% coupons in a split 2016 maturity to 3.47% with a 5% coupon and 3.85% with a 4% coupon in a split 2035 maturity. The bonds were rated Aa3 by Moody's Investors Service, A by Standard & Poor's and A-plus by Fitch Ratings.
Citi also priced the Commission's $4.96 million of road fund revenue bonds for Project No. 111. The issue, which is rated Aa2 by Moody's, A by S&P and A-plus by Fitch, was priced to yield from 0.60% at par in 2016 to 3.80% with a 3.625% coupon in 2035.
In the competitive arena, Westchester County, N.Y., sold $104.5 million of general obligation bonds in three separate sales.
Mesirow Financial won the $96.24 million of Series 2015B tax-exempt GOs with a true interest cost of 1.87%. Robert W. Baird won the $4.31 million of Series 2015C taxable GOs with a TIC of 1.66%. Roosevelt & Cross won the $3.96 million of Series 2015D tax-exempt GOs with a TIC of 2.48%. No pricing information on the deals was immediately available.
All three issues were rated Aa1 by Moody's and triple-A by S&P and Fitch Ratings.
Barclays Capital is expected to price the Missouri Health and Educational Facilities Authority's $100 million of Series 2015 and 2015A educational facilities revenue bonds and Series 2015B taxable educational facilities revenue bonds. The issue is rated A1 by Moody's and AA-minus by S&P.
Slowly They Turn, Step by Step
The Federal Open Market Committee, while insisting no decision has been made, took what many believe to be the first step toward a December rate hike. Of course, the panel hedged by noting a hike could be derailed by "unanticipated shocks" that "adversely affect" the outlook, and also touted the need for incoming data to support the belief the Fed's dual mandate will be met "over the medium term," according to minutes from their latest meeting, released Wednesday.
Yet, another passage from the minutes would discount the effect of a weak jobs report: "Some participants emphasized that progress toward the Committee's objectives should be assessed in light of the cumulative gains made to date without placing excessive weight on month-to-month changes in incoming data."
While the voters felt adding the wording about a possible hike at the "next meeting" left options open, "a couple of members" were concerned the verbiage "could be misinterpreted" as a signal that a hike was impending.
Based on statements by the ten voting members, it seems there could be enough votes to start normalization with only three voters solid "nos," although most voters remained non-committal.
On Thursday, in a televised interview, Federal Reserve Bank of Cleveland President Loretta Mester said the panel expects conditions to be right to raise rates, but the incoming data must confirm it.
Tax-Exempt Money Market Funds Post Inflows
Tax-exempt money market funds experienced inflows of $235.9 million, bringing total net assets to $245.79 billion in the period ended Nov. 16, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $383 million to $245.56 billion in the previous week.
The average, seven-day simple yield for the 373 weekly reporting tax-exempt funds remained at 0.01% for the 133rd straight week.
The total net assets of the 958 weekly reporting taxable money funds rose $2.63 billion to $2.504 trillion in the period ended Nov. 17, after an inflow of $7.23 billion to $2.501 trillion the previous week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 44th week in a row.
Overall, the combined total net assets of the 1,331 weekly reporting money funds increased $2.86 billion to $2.750 trillion in the period ended Nov. 16, which followed an inflow of $7.61 billion to $2.747 trillion the week before.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.72 billion to $6.01 billion on Thursday. The total is comprised of $2.58 billion competitive sales and $3.43 billion of negotiated deals.
