The municipal market was slightly firmer Thursday, ahead of a three-day weekend in observance of the July 4 holiday.
“It’s quiet to say the least,” a trader in New York said. “There’s still some recent buying at the front of the curve thanks to the reinvestment period and the lack of new issues. It’s probably continuing to get a bit firmer like earlier this week.”
“The market is pretty quiet, but these past few days it has firmed up a bit,” a trader in Los Angeles added.
The Treasury market, however, was narrowly mixed Thursday. The yield on the benchmark 10-year Treasury note, which opened at 3.96%, finished at 3.98%. The yield on the two-year note was quoted near the end of the session at 2.54% after opening at 2.58%.
In economic data released Thursday, the unemployment rate remained unchanged at 5.5% in June, after rising 0.5 points in May, its largest jump in 20 years. Non-farm payrolls shrank by 62,000 in June, falling for the sixth consecutive month, while May payrolls were revised down 13,000, also to a loss of 62,000. Economists polled by IFR Markets had expected a 5.5% unemployment rate and a 60,000 loss in June payrolls.
Although the jump in May was likely due to the seasonal quirk of high school and college students entering the job market, the unemployment rate for workers over 25 years old has risen to 4.3% from 3.9% in April. In addition, while the weakness in the beginning of the year appeared to be due to “subdued” hiring, it appears that actual job losses are now taking their toll, according to Scott Brown, chief economist at Raymond James & Associates.
“The headline figures were in line with expectations,” Brown said. “But once you start digging through the details this is a poor report and does not bode well for the rest of the year in terms of economic outlook.”
The labor report showed weakness in construction, manufacturing and retail. Motor vehicle production saw gains, but that was likely due to the conclusion of strikes.
“It’s pretty weak all around,” Brown said.
Initial jobless claims for the week ended June 28 came in at 404,000, after a revised 388,000 the previous week. Economists polled by IFR Markets had predicted 385,000 initial jobless claims.
Continuing jobless claims for the week ended June 21 came in at 3.116 million, after 3.057 million the previous week. Economists polled by IFR had predicted 3.150 million continuing jobless claims.
The Institute for Supply Management’s non-manufacturing business activity composite index was 48.2 in May, down from 51.7 in May, on a seasonally adjusted basis. Economists polled by IFR had expected a 51.0 level.
Activity in the new-issue market was light Thursday.