The municipal market was slightly firmer yesterday in light activity. Traders said tax-exempt yields were lower by one or two basis points. “The market is quiet, and it seems there are a lot of bonds out for bid for customers,” a trader in New York said. “We don’t have a lot of secondary activity, and if there is trading it seems to be for the retail guys and not the institutional accounts.” Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. A dealer sold to a customer California 5s of 2037 at 4.89%, even with where they traded Wednesday. A dealer sold to a customer Washington County School District, Utah, 4s of 2018 at 3.86%, down one basis point from where they sold Wednesday. A dealer sold to a customer insured Los Angeles County Schools Pooled Financing Program 4.5s of 2008 at 2.98%, down two basis points from where they sold Wednesday. The Treasury market was mixed yesterday. The yield on the benchmark 10-year Treasury note, which opened at 4.03%, was quoted near the end of the session at 4.05%. The yield on the two-year note was finished at 3.09% after opening at 3.11%. In other news, Fitch Ratings placed MBIA Insurance Corp. on negative watch after a comprehensive review of MBIA’s residential mortgage-backed security portfolio found that the financial guarantor’s capital model falls below the guidelines needed for a triple-A rating by $1 billion. Also the municipal market continued to show little reaction to Standard & Poor’s downgrade Wednesday of ACA FinancialGuaranty Corp. to CCC. “Those ACA bonds have been trading on their underlying ratings for some time now,” a trader in San Francisco said. “Nobody on our end really sees this as too big a deal.” In economic data released yesterday, initial jobless claims for the week ending Dec. 15 came in at 346,000, after a revised 334,000 the previous week. Additionally, continuing jobless claims for the week ending Dec. 8 came in at 2.646 million after a revised 2.634 million the prior week. Economists polled by IFR Markets had predicted 335,000 initial claims and 2.600 million continuing claims. The final third-quarter gross domestic product came in at 4.9% after a 4.9% annual rate the previous reading. Economists polled by IFR Markets accurately predicted a 4.9% level. The composite index of leading economic indicators fell 0.4% in November, after a 0.5% dip in October. Economists polled by IFR Markets predicted LEI would be down 0.3% in the month. Today, November personal income, November personal consumption, the November core personal consumption expenditures deflator, and the December University of Michigan consumer sentiment index will be released. Economists polled by IFR Markets are predicting a 0.5% up tick in personal income, a 0.6% rise in personal consumption, a 1.9% core PCE deflator, and a 74.5 Michigan sentiment reading. In the new-issue market yesterday, Hackensack, N.J., competitively sold $11.9 million of general improvement bonds to Citi with a true interest cost of 3.94%. The bonds mature from 2009 through 2021, with yields ranging from 3.00% with a 3.75% coupon in 2009 to 3.95% with a 4% coupon in 2021. The bonds, which are callable at par in 2017, are insured by Financial Security Assurance Inc. Moody’s Investors Service rates the underlying credit Aa3 and Standard & Poor’s rates it AA-minus. Irvington, N.J., competitively sold $9.1 million of general improvement bonds to Roosevelt & Cross, with a TIC of 4.89%. The bonds mature from 2009 through 2023. None of the bonds were formally reoffered, but coupons range from 5% in 2009 to 4.5% in 2023. The bonds, which are callable at par in 2018, are rated A1 by Moody’s.
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