The municipal market was unchanged to slightly firmer Friday, after the non-farm payrolls report showed that 17,000 jobs were cut in January, but its effect was tempered by an upwardly revised December non-farm payrolls figure.

“There is some trading going on, but not a whole lot though,” a trader in New York said. “We’re up about a basis point or two, if anything. It seems like we’re hitting sort of a brick wall here, as far as a push. The Treasury market seems to have the same problem. There’s just some buying going on, but it’s not like it was a couple weeks ago, when everyone was enthusiastic. There are a lot of problems with all the insurers, so the buyers are picky. If you’ve got a good, clean name, you can sell it. Otherwise it’s hard to get anything going.”

The Treasury market showed some gains Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.59%, finished at 3.58%. The yield on the two-year note was quoted near the end of the session at 2.06%, after opening at 2.09%.

In economic data released Friday, non-farm payrolls dropped 17,000 in January, after a revised 82,000 increase the previous month. Economists polled by IFR Markets had predicted that 58,000 new jobs were created in January.

The decline marked the first contraction in jobs since 2003, though it comes with the following caveat: non-farm payrolls were negative in August 2007, reported a drop of 4,000, before being upwardly revised the following month to show a gain of 89,000 jobs.

Additionally, muting the impact of Friday’s 17,000-job dip, the December figure was upwardly revised from 18,000 new jobs created to 82,000.

“It’s really a mixed bag of ups and downs,” said Bob MacIntosh, chief economist and portfolio manager at Eaton Vance. “I think the key, though, is hours worked went down. That’s a number that’s a better read on what’s actually happening. I’m essentially ignoring the actual jobs numbers, and that [average hourly earnings number] tells me that the economy has probably slowed slightly from where it had been the month before. That’s a much more consistent number to track.”

“I don’t think the market has a clue how to react to it,” he said. “With all the revisions, even though we had a loss of jobs theoretically in January, you had the unemployment rate come down by 0.1%. There’s a lot of contradictory information in that report.”

The unemployment rate came in at 4.9% in January, down 0.1 percentage point from 5.0% the previous month. Also, there was a 0.2% rise in average hourly earnings in January, compared to the 0.4% increase the prior month. Economists polled by IFR Markets had predicted the employment rate would be 4.9%, and that average hourly earnings would grow 0.3%.

In other data released, construction spending dropped 1.1% in December, after a revised 0.4% drop the previous month. Economists polled by IFR Markets had predicted a 0.5% decline.

The Institute for Supply Management’s business activity composite index came in at 50.7 in January, after registering 47.7 the previous month. Economists polled by IFR Markets had predicted the index would be 47.0.

The University of Michigan’s final January consumer sentiment index reading was 78.4, compared to the preliminary January 80.5, the final December reading of 75.5, and the 74.5 reading earlier in December. Economists polled by IFR Markets had predicted a 79.0 reading for the index.

The new-issue market was light Friday.


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