The municipal market was mostly flat Friday with a slightly firmer tone, amid fairly light secondary trading activity.
“There’s not a whole lot trading at this point,” a trader in New York said. “We might be firmer by a basis point or two in spots, but we’re just pretty much flat.”
“The long end is flat, for sure, but there’s a bit of firmness in the belly of the curve,” a trader in Los Angeles said. “In the 10-, maybe 15-year range, we’re better maybe a basis point or so. But it’s fairly quiet.”
The Treasury market showed some gains Friday. The benchmark 10-year note was quoted near the end of the session with a yield of 3.77% after opening at 3.83%. The yield on the two-year finished at 0.96% after opening at 1.01%. The yield on the 30-year bond finished at 4.68% after opening at 4.72%.
The Municipal Market Data triple-A scale yielded 3.03% in 10 years and 3.85% in 20 years Friday, compared with Thursday’s levels of 3.05% and 3.85%. The scale yielded 4.15% in 30 years Friday, matching Thursday.
Thursday’s triple-A muni scale in 10 years was at 79.4% of comparable Treasuries and 30-year munis were at 87.9%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 92.2% of the comparable London Interbank Offered Rate.
Trades reported by the Municipal Securities Rulemaking Board Friday were flat to slightly firmer. Bonds from an interdealer trade of New Jersey Environmental Infrastructure Trust 4s of 2022 yielded 3.61%, down one basis point from where they traded Thursday. A dealer sold to a customer taxable California Build America Bonds 7.63s of 2040 at 6.95%, even with where they traded Thursday.
Bonds from an interdealer trade of taxable Massachusetts BABs 5.46s of 2039 yielded 5.37%, even with where they were sold Thursday. A dealer sold to a customer New York’s Metropolitan Transportation Authority 5.125s of 2029 at 4.74%, one basis point lower from where they traded Thursday.
Bonds from an interdealer trade of New York State 5.17s of 2023 yielded 5.08%, even with where they traded Thursday. A dealer sold to a customer District of Columbia 5s of 2023 at 3.54%, even with where they traded Thursday.
In economic data released Friday, groundbreaking for new home construction increased 1.6% in March to a seasonally adjusted 626,000, as building permits increased 7.5% to 685,000.
Both measures of housing activity were higher than economists’ estimates. March’s housing starts were the most since November 2008 and building permits were the most since October 2008.
Economists expected 610,000 housing starts and 630,000 building permits in March, according to the median estimate from Thomson Reuters.
The University of Michigan’s preliminary April consumer sentiment index reading was 69.5, compared to the final March 73.6 reading. Economists polled by Thomson Reuters had predicted a 75.0 reading for the index.