The municipal market was slightly weaker Friday.
"We were flat to a little unchanged in the early morning, but we drifted off to a little weaker as the day wore on," a trader in Los Angeles said. "I'd say we finished off about two or three basis points higher in yield."
"Everyone is looking forward to the three-day weekend and with the early close [Friday], I think everyone is basically in holiday mode already," a second trader in New York added.
Trades reported by the Municipal Securities Rulemaking Board Friday showed mild losses. Bonds from an interdealer trade of Passaic County, N.J., yielded 5.08%, one basis point higher than where they traded Thursday. Bonds from an interdealer trade of Prince George's County, Md., 5s of 2026 yielded 4.23%, even with where they traded Thursday. Bonds from an interdealer trade of California 5s of 207 yielded 5.03%, two basis points higher than where they were sold Thursday.
The Treasury market, however, showed some gains Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.81%, was recently quoted at 3.76%. The yield on the two-year note was quoted recently at 1.90%, after opening at 1.91%.
In economic data released Friday, the U.S. import price index was up 1.7% in January, which followed a downwardly revised 0.2% decrease in import prices in December, originally reported as no change. IFR Markets had predicted a 0.5% increase for the imports index.
Industrial production in the nation was up 0.1% in January while capacity utilization held at 81.5. The rise in production level followed a 0.1% increase the previous month, originally reported as unchanged, while December capacity use was revised up to 81.5 from the initially reported 81.4. IFR had forecast a 0.1% increase in production, and an 81.4% level for capacity utilization.
The University of Michigan's preliminary February consumer sentiment index reading was 69.6, compared to the final January consumer sentiment index reading of 78.4. Economists polled by IFR had predicted a 77.0 reading for the index
Also, the Empire State Manufacturing Survey "indicates that conditions for New York manufacturers deteriorated in February," as the general business conditions index slumped to negative 11.72 in February from positive 9.03 in January. It was the first time since May 2005 that the index was negative. Economists surveyed by IFR Markets had expected the index would be 5.75.
This week, though shortened due to the Presidents Day holiday, will still see some significant data. Tomorrow, the January consumer price index will be released, as will January housing starts, and January building permits. On Thursday, initial jobless claims for the week ended Feb. 16 will be released and the January composite index of leading economic indicators.
Economists polled by IFR are predicting a 0.3% rise in CPI, a 0.2% gain in CPI core, 1.010 million housing starts, 1.040 million building permits, 348,000 initial claims, 2.775 million continuing claims, and a 0.1% dip in LEI.
Activity in the new-issue market was light Friday.
