The municipal market was firmer by three to five basis points yesterday.

"The market is pretty firm," a trader in Chicago said. "There's quite a bit of interest. It seems like it's tougher to buy bonds."

Trades reported to Municipal Securities Rulemaking Board showed gains. Bonds from an interdealer trade of Arizona's Salt River Project Agricultural Improvement and Power District 5s of 2038 yielded 4.79%, down two basis points from Monday. Bonds from an interdealer trade of New York's insured Long Island Power Authority 5s of 2033 yielded 5.07%, down two basis points from Monday. Bonds from an interdealer trade of Texas' Northside Independent School District 5s of 2038 yielded 4.87%, unchanged from Monday.

"It hasn't been terribly active, but we are certainly firmer," a trader in Los Angeles said. "I'd say we're better a solid four basis points."

The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.97%, finished at 4.00%. The yield on the two-year note was quoted near the end of the session at 2.65% after opening at 2.62%.

In economic data released yesterday, the overall economy grew for the 80th straight month, while the manufacturing sector expanded after four months of contraction, the Institute for Supply Management reported. According to the ISM's monthly report on business, the ISM index gained to 50.2 in June from 49.6 in May. Economists polled by IFR Markets predicted the index would slip to 48.7.

Although "it was nice to see a rise," said Joel Naroff, president of Naroff Economic Advisors, there were still some details in the data that are of concern: new orders are still slowing and payrolls were cut sharply.

"The sector may have grown in June, but you can't conclude it's out of the woods," Naroff said. "There's still uncertainty."

In addition, spending on construction projects fell 0.4% to a seasonally adjusted annual rate of $1.085 trillion in May as private construction decreased 0.7% and public construction rose 0.4%. The overall decrease, which was smaller than the 0.5% decrease projected by IFR, followed a revised April decrease of 0.1% to a level of $1.089 trillion.

A slate of economic data will be released today and tomorrow in this holiday-shortened week. Today, May factory orders data will be released, while tomorrow the June employment report is due. Economists polled by IFR Markets expect unemployment to remain at 5.5%, unchanged for the month, while non-farm payrolls are expected to slide 50,000.

In the new-issue market yesterday, JPMorgan priced $522.2 million of mental health services facilities improvement revenue bonds for the Dormitory Authority of the State of New York in five series, after pricing the offering for retail Monday. Bonds from the $163.6 million Series A mature from 2009 through 2028, with term bonds in 2033 and 2038. Yields range from 2.9% with a 4% coupon in 2009 to 4.91% with a 5% coupon in 2038. Bonds maturing 2009 were decided via sealed bid. Bonds maturing from 2015 through 2028 and the term bonds in 2033 and 2038 are insured by Financial Security Assurance Inc.

Bonds from the $81.3 million Series B mature from 2009 through 2028 with a term bonds in 2033. Yields range from 2.9% with a 4% coupon in 2010 to 4.88% with a 5% coupon in 2033. Bonds maturing 2009 were decided via sealed bid. Bonds maturing from 2015 through 2028 and the term bonds in 2033 are insured by FSA. Bonds from the $38.5 million Series C, which are subject to the alternative minimum tax, mature from 2009 through 2013 with term bonds in 2018, 2028, and 2033. All bonds are priced at par, with coupons ranging from 2.6% in 2009 to 5.4% in 2033. Bonds maturing 2018, 2028, and 2033 are insured by FSA.

Bonds from $197.8 million Series D mature from 2009 through 2019, with yields ranging from 2% with a 4% coupon in 2009 to 4.25% with a 5% coupon in 2019. Bonds maturing 2009 were decided via sealed bid. Bonds maturing 2015 through 2019 are insured by FSA. Bonds from the $40.97 million Series E mature from 2009 through 2019, with yields ranging from 2% with a 4% coupon in 2009 to 4.25% with a 5% coupon in 2019. Bonds maturing in 2009 were decided via sealed bid. Bonds maturing 2015 through 2019 are insured by FSA.

Bonds from all series, which are callable at par in 2018, have underlying ratings of AA-minus from Standard & Poor's and A-plus by Fitch Ratings.

Banc of America Securities LLC priced $120.9 million of certificates of participation for Oregon. Bonds mature from 2009 through 2028, with a term bond in 2033. Yields range from 1.8% with a 4% coupon in 2009 to 4.87% with a 4.8% coupon in 2033. The bonds, which are callable at par in 2018, are insured by FSA, with underlying credit ratings of Aa3 from Moody's Investors Service and AA-minus from Standard & Poor's and Fitch.

Banc of America also priced $67.4 million of urban renewal and redevelopment bonds and refunding bonds for Portland, Ore., in two series, some of which are taxable. Bonds from the $32 million, tax-exempt Series B mature from 2019 through 2024, with yields ranging from 4.3% on a 5% coupon to 4.63% with a 5% coupon. The bonds are callable at 101 in 2018, declining to par in 2019. The bonds are rated Aa3 by Moody's. The offering also contains a $35.4 million, taxable Series A.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.