The municipal market was again firmer Friday. Traders said tax-exempt yields were lower by about three or four basis points overall.
"I know it's the first week of the year, and we're usually accustomed to conditions being pretty positive in years past, but this was certainly a really good week for munis," a trader in Los Angeles said. "It wasn't as firm today as the last couple of sessions, but we picked up another few basis points today, we had pretty solid demand all week, and conditions are just pretty good right now. We'll see how long it lasts, but there's definitely a pretty positive tone out there."
Trades reported by the Municipal Securities Rulemaking Board Friday showed gains. A dealer sold to a customer insured Los Angeles Unified School District 4.75s of 2025 at 4.83%, down three basis points from where they traded Thursday. A dealer sold to a customer Texas 4.5s of 2028 at 4.82%, four basis points lower than where they were sold Thursday. A dealer sold to a customer Georgia 4.5s of 2027 at 4.34%, three basis points lower than where they traded Thursday.
A dealer sold to a customer insured Frisco, Tex., 5s of 2022 at 4.14%, down four basis points from where they traded Thursday. A dealer sold to a customer Virginia College Building Authority 5s of 2022 at 4.00%, five basis points lower than where they were sold Thursday. Bonds from an interdealer trade of California 5.5s of 2033 yielded 5.55%, two basis points lower than where they traded Thursday.
"We're a bit firmer again today, though not as much as we've been the last few days," a trader in New York said. "It's not as active as it's been, but that's largely because it's Friday. There's still some deals getting done, some decent demand out there."
The Treasury market showed gains Friday. The yield on the benchmark 10-year Treasury note, which opened at 2.44%, finished at 2.39%. The yield on the two-year note was quoted near the end of the session at 0.75% after opening at 0.83%. The yield on the 30-year bond, which opened at 3.05%, was quoted near the end of the session at 3.04%.
In economic data released Friday, non-farm payrolls fell 524,000 in December after a revised 584,000 decline the previous month. Economists polled by Thomson Reuters had predicted a drop of 550,000 payrolls. The unemployment rate rose to 7.2% in December after a revised 6.8% the previous month. Economists polled by Thomson had predicted a 7.0% unemployment rate.
Merchant wholesalers posted a 0.6% decrease in inventories in November, while sales dropped 7.1% in the month. Inventories of merchant wholesalers slid to $435.0 billion, following a revised 1.2% decrease to $437.7 billion in October. Meanwhile, sales of merchant wholesalers slid to about $349.2 billion, following October's revised 4.5% decrease to $376.1 billion. Economists polled by Thomson Reuters predicted a 0.8% decrease in wholesale inventories.