The municipal market was slightly weaker yesterday. Traders said tax-exempt yields were higher by two to four basis points overall.
"We're definitely a bit weaker," a trader in New York said. "There's weakness out there in the Treasury market, and things aren't really much better in munis. There was a weaker tone yesterday, but it was still pretty flat overall, but today it's definitely weaker, I'd say across the board."
"We're probably as much as four basis points in spots, but overall, I think it's more in the range of two or three basis points weaker," a trader in Los Angeles added. "We're definitely down a bit all along the scale, though."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.75%, was quoted near the end of the session at 2.86%. The yield on the two-year note was quoted near the end of the session at 0.99% after opening at 0.94%. The yield on the 30-year bond, which opened at 3.55%, was quoted near the end of the session at 3.68%.
In the new-issue market yesterday, Goldman, Sachs & Co. priced $510 million of general obligation bonds for Massachusetts. The bonds mature from 2010 through 2029, with term bonds in 2034 and 2039. Yields range from 1.24% with a 2% coupon in 2011 to 4.98% with a 5% coupon in 2039. Bonds maturing in 2010 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's Investors Service and AA by both Standard & Poor's and Fitch Ratings.
Morgan Stanley priced $228.7 million of electric system revenue bonds for Florida's Jacksonville Electric Authority in two series. Bonds from the $112.4 million Series A mature from 2009 through 2029, with yields ranging from 1.00% with a 3% coupon in 2009 to 5.37% with a 5.25% coupon in 2029. The bonds are callable at par in 2014, except certain bonds maturing in 2016 and 2017, which both contain split maturities. Bonds maturing in 2016 with 4% coupons and bonds maturing in 2017 with 5% coupons are not callable. The bonds are rated Aa2 by Moody's and AA-minus by both Standard & Poor's and Fitch.
Bonds from the $116.3 million Series B mature from 2009 through 2019, with yields ranging from 1.25% with a 3% coupon in 2009 to 4.35% with a 5% coupon in 2019. These bonds are callable at par in 2014, and are rated Aa3 by Moody's, A-plus by Standard & Poor's, and AA-minus by Fitch.
Morgan Stanley also priced $50 million of GOs for California's Oceanside Unified School District in two series. Bonds from the $24.9 million series of current interest bonds mature in 2033, yielding 5.32% with a 5.25% coupon. The bonds are callable at par in 2018. The deal also contains a $25.1 million series of capital appreciation bonds, which mature from 2014 through 2031 and are not callable. All bonds are insured by Assured Guaranty Corp. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's.
The Cache County, Utah, School District Board of Education competitively sold $23 million of GO school building bonds to Morgan Keegan & Co. with a true interest cost of 3.69%. The bonds mature from 2010 through 2026, with coupons ranging from 3% in 2010 to 4.3% in 2026. None of the bonds were formally re-offered. The bonds, which are callable at par in 2018, are backed by the Utah School Bond Guaranty Program, which is rated triple-A by Standard & Poor's.
Merrimack County, N.H., competitively sold $21 million of tax anticipation notes to Depfa First Albany Securities LLC with a net interest cost of 3.07%. The Tans mature in Dec. 2009, with a 3.25% coupon. The Tans were not formally re-offered. The notes are rated SP-1-plus by Standard & Poor's.
In economic data released yesterday, initial jobless claims came in at 627,000, after a revised 627,000 the previous week. Economists polled by Thomson Reuters had predicted 620,000 initial jobless claims.
Continuing jobless claims came in at 4.987 million, after a revised 4.817 million the previous week. Economists polled by Thomson had predicted 4.850 million continuing jobless claims.
The producer price index rose 0.8% in January, after a 1.9% drop the previous month. Economists polled by Thomson had predicted a 0.2% climb.
The PPI core increased 0.4% in January, after a 0.2% uptick the previous month. Economists polled by Thomson Reuters had predicted a 0.1% rise.
Manufacturing activity in the Federal Reserve Bank of Philadelphia's region "continued to deteriorate" in February, this month's Report on Business indicates, as the general business conditions index decreased to negative 41.3 in February from negative 24.3 in January. Economists surveyed by Thomson Reuters predicted a reading of negative 25.0 for the index.
Also, the composite index of leading economic indicators rose 0.4% in January. LEI increased a revised 0.2% in December. The LEI stands at 99.5. Economists polled by Thomson predicted LEI would be flat in the month.
Today, the January consumer price index will be released. Economists polled by Thomson Reuters are predicting a 0.3% uptick in CPI, and a 0.1% increase in core CPI.