The municipal market was unchanged to slightly weaker Friday amid fairly light secondary trading.
“There’s a bit of weakness, but there isn’t a whole lot of movement,” a trader in San Francisco said. “We’re down maybe a basis point or two in spots, but it’s quiet.”
Traders said the market has shown little reaction to Congress’ failure to include an extension of Build America Bonds past its Dec. 31 expiration date in the tax compromise bill released late Thursday. BABs traded tighter Friday when they traded, according to trades reported to the Municipal Securities Rulemaking Board, but activity was muted.
A dealer sold to a customer New Jersey Turnpike Authority BAB 7.102s of 2041 at 6.84%, down five basis points from where they were sold Thursday. Bonds from an interdealer trade of California BAB 7.95s of 2036 yielded 7.56%, four basis points lower than where they traded Thursday. Bonds from an interdealer trade of Port Authority of New York and New Jersey 5.647s of 2040 yielded 6.05%, down three basis points from where they traded Thursday.
The Municipal Market Data triple-A scale yielded 3.01% in 10 years Friday, up two basis points from Thursday’s 2.99%, matching its highest level since 3.01% on Nov. 18, while the 20-year scale increased two basis points to 4.25%, its highest since 4.26% on July 6, 2009. The scale for 30-year debt yielded 4.61%, matching Thursday’s level.
“It’s a touch weaker,” a New York trader said, noting that market activity was light. “I’m getting a lot of paperwork done today.”
Friday’s triple-A muni scale in 10 years was at 91.2% of comparable Treasuries and 30-year munis were at 104.3%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 112.2% of the comparable London Interbank Offered Rate.
The Treasury market was weaker Friday. The benchmark 10-year note finished at 3.32% after opening at 3.20%. The 30-year bond finished at 4.43% after opening at 4.40%. The two-year note finished at 0.64% after opening at 0.62%.
In economic data released Friday, import prices jumped more than economists expected in November, rising 1.3% as export prices surged by 1.5%, the Labor Department reported Friday morning. Economists expected a gain of 0.8% in overall import prices, according to the median estimate in a Thomson Reuters survey of forecasters.
Fuel import prices rose precipitously for a second straight month, growing by 3.7% after a revised 3.8% gain the previous month. Import prices excluding fuel increased 0.8% and prices excluding petroleum crept up 0.7%.
Consumer sentiment rose more than economists expected in December, increasing to a preliminary level of 74.2 in the University of Michigan consumer sentiment index from a final November reading of 71.6. Economists predicted a 72.5 reading for the index.