Tax-exempts finished the week unchanged, but with a firmer tone. Traders said tax-exempt yields were flat to lower by one or two basis points.
"There's not a whole lot going on, just a quiet Friday," a trader in New York said. "There's still some firmness out there, but we're probably unchanged on the whole. Maybe a basis point or two better out on the long end."
Trades reported by the Municipal Securities Rulemaking Board Friday showed some gains. Bonds from an interdealer trade of California 5.25s of 2029 at 5.33%, even with where they traded Thursday. Bonds from an interdealer trade of insured New York's Metropolitan Transportation Authority 5s of 2035 at 5.11%, down two basis points from where they were sold Thursday. Bonds from an interdealer trade of Illinois State Toll Highway Authority Build America Bonds, 6.18s of 2034 yielded 6.03%, two basis points lower than where they traded Thursday.
Bonds from an interdealer trade of Golden State Tobacco Securitization Corp. 4.5s of 2027 yielded 5.76%, one basis point lower than where they traded Thursday. A dealer sold to a customer New Jersey Turnpike Authority BABs, 7.41s of 2040 at 6.46%, two basis points lower than where they were sold Thursday. Bonds from an interdealer trade of insured Puerto Rico 6s of 2027 yielded 5.75%, even with where they traded Thursday.
"It's quiet, but things are a bit firmer," a trader in Los Angeles said. "I'm definitely seeing things somewhat firmer on the long end. I'm not sure it's enough to move the scale, just because it's so quiet and nothing's really trading. But the tone is definitely firm."
The Treasury market showed some losses Friday. The yield on the benchmark 10-year note, which opened at 3.09%, was quoted near the end of the session at 3.14%. The yield on the two-year note was quoted near the end of the session at 0.86% after opening at 0.84%. The yield on the 30-year bond, which opened at 4.05%, was quoted near the end of the session at 4.09%.
As of Thursday's close, the triple-A muni scale in 10 years was at 90.4% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 108.8% of comparable Treasuries. Also, as of the close Thursday, 30-year tax-exempt triple-A rated general obligation bonds were at 121.7% of the comparable London Interbank Offered Rate.
Activity in the new-issue market was light Friday.
In economic data released Friday, the consumer price index was unchanged in April, after a 0.1% drop the previous reading. Economists polled by Thomson Reuters had predicted a 0.2% rise.
The CPI core climbed 0.3% in April, after a 0.2% uptick the previous month. Economists polled by Thomson Reuters had predicted a 0.2% rise.
The University of Michigan's preliminary May consumer sentiment index reading was 67.9, compared to the final April 65.1 reading. Economists polled by Thomson Reuters had predicted a 68.2 reading for the index.
Industrial production in the nation was down 0.5% in April while capacity utilization fell to 69.1. The drop in production levels followed a 1.7% decrease the previous month, while March capacity use was revised up to 69.4. Thomson Reuters had forecast a 0.3% decrease for production, and a 69.0% level for capacity utilization.