The municipal market was somewhat firmer Friday, after the August non-farm payrolls data came in weaker than expected.

Traders said tax-exempt yields were lower by two or three basis points.

"We're not seeing a reaction [to the payrolls number] in the actual trading," a trader in New York said. "We're doing a little better though, probably as much as three basis points. People are generally going to the new issues now, because that's where you can get cheaper bonds, particularly on the long end. The secondary market just isn't that attractive right now."

In the new-issue market Friday, Citi priced for retail investors $700 million of New York City general obligation bonds. The bonds mature from 2010 through 2026, with yields ranging from 2.08% with a 3% coupon in 2010 to 4.66% with a 4.625% coupon in 2026. Bonds maturing from 2020 through 2022 and in 2024 and 2025 were not offered during the retail order period. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings. The bonds will be priced for institutional investors Wednesday.

In economic data released Friday, non-farm payrolls dropped 84,000 in August, after a revised 60,000 the previous month. Economists polled by IFR Markets had predicted a decline of 75,000 jobs.

Also, the unemployment rate increased to 6.1%, after a 5.7% reading the previous month. Economists polled by IFR had predicted a 5.8% unemployment rate.

Trades reported by the Municipal Securities Rulemaking Board Friday showed gains. A dealer sold to a customer California 5s of 2027 at 4.82%, two basis points lower than where they were sold Thursday. A dealer sold to a customer Financial Security Assurance Inc.-backed New York City Municipal Water Finance Authority 4.5s of 2029 at 4.72%, down one basis point from where they traded Thursday. A dealer sold to a customer New York State Thruway Authority 5s of 2027 at 4.58%, two basis points lower than where they traded Thursday.

"We saw some firmness, but not an overwhelming amount," a trader in Los Angeles said. "Treasuries are off a little bit, but tax-exempts have been up all day, since the jobs report in the morning. I think the Treasury weakness is more on technicals anyway."

The Treasury market showed some losses. The yield on the benchmark 10-year Treasury note, which opened at 3.63%, finished at 3.65%. The yield on the two-year note was quoted near the end of the session at 2.23% after opening at 2.17%. The yield on the 30-year Treasury was quoted near the end of the session at 4.27% after opening at 4.26%.

This week is anticipating a slate of economic date releases. Tomorrow, July wholesale inventories will be released, along with wholesale sales for July. On Thursday, import prices for August, initial jobless claims for the week ended Sept. 6, and continuing jobless claims for the week ended Aug. 30 are scheduled. On Friday, August retail sales, the August producer price index, the August PPI core, the preliminary September University of Michigan consumer sentiment index, July business inventories, and business sales for July will all be released.

Economists polled by IFR Markets are predicting a 0.7% rise in wholesale inventories, a 1.5% climb in wholesale sales, a 1.7% decline in import prices, 440,000 initial jobless claims, 3.463 million continuing jobless claims, a 0.3% increase in retail sales, a 0.2% drop in retail sales excluding autos, a 0.5% decrease in PPI, a 0.2% uptick in PPI core, a 64.0 reading for the Michigan sentiment index, a 0.5% increase in business inventories, and a 1.4% climb in business sales.

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