The municipal market was slightly firmer Friday amid light to moderate secondary trading activity.
“It’s somewhat quiet, but we’re definitely seeing some gains again,” a trader in Los Angeles said. “I’d say we’re better by about two basis points overall, maybe one or three in spots. But overall, I’d say two basis points more expensive.”
The Municipal Market Data triple-A scale yielded 2.35% in 10 years Thursday, down eight basis points from Wednesday’s 2.43%, while the 20-year scale dropped three points to 3.32% from Wednesday’s 3.35%.
The scale for 30-year debt yielded 3.72%, one basis point lower than Wednesday’s 3.73%.
“We’re a bit firmer,” a trader in New York said. “We’re probably up a basis point or two at this point, but there’s not a whole lot trading.”
Friday’s triple-A muni scale in 10 years was at 97.5% of comparable Treasuries and 30-year munis were at 99.2%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 109.8% of the comparable London Interbank Offered Rate.
The Treasury market mostly showed some losses Friday. The benchmark 10-year note was quoted near the end of the session at 2.39% after opening at 2.38%.
The 30-year bond was quoted near the end of the session at 3.75% after opening at 3.72%. The two-year note was quoted near the end of the session at 0.36% after opening at 0.35%.
In economic data released Friday, total nonfarm payrolls fell more than economists expected in September, declining by 95,000 jobs as cash-strapped state and local governments cut head counts by the most in 28 years.
The preliminary annual benchmark revision showed a decline of 366,000 workers, as private-sector jobs fell by 371,000, while public-sector employment rose by 5,000.
The unemployment rate remained at 9.6%. Private nonfarm payrolls rose 64,000.
Economists expected total nonfarm payrolls to be flat for the month and for private payrolls to increase by 75,000, according to the median estimate from Thomson Reuters. They saw unemployment rising to 9.7%.
Wholesale inventories rose 0.8% in August and sales grew 0.5%.
Economists expected wholesale inventories to increase 0.5% and sales to expand 0.4%, according to Thomson Reuters.
“Jobs creation is still likely to accelerate over the next few months,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi, wrote in a commentary. “However, the Fed has been moving in the direction of easing since their Aug. 10 meeting, and this final monthly payroll jobs report before they meet on Nov. 2 and 3 is not going to be something for them to cheer about.”
“We sense they have become impatient with the economic speed of the recovery and how it is not putting people back to work quickly enough,” Rupkey said. “Eight-point-five million jobs lost and 863,000 created … We are barely 10% back to the old employment level, not enough progress and we expect some form of quantitative ease will be announced on Nov. 3. It can’t hurt.”
Activity in the new-issue muni market was light Friday, following a $13 billion deluge of supply that came to market last week.