Munis Slightly Firmer, Following Treasuries

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The municipal market was slightly firmer Friday, following Treasuries.

"We were mostly better this week in munis, and we finished the week to that same effect," a trader in Los Angeles said. "It was pretty much a summer Friday, but we're about a basis point or two firmer."

Trades reported by the Municipal Securities Rulemaking Board Friday showed some gains. A dealer sold to a customer California's Bay Area Toll Authority 5s of 2039 at 4.80%, down two basis points from where they were sold Thursday. A dealer sold to a customer New York's Suffolk Tobacco Asset SecuritizationCorp. 5.375s of 2028 at 5.75%, three basis points lower than where they traded Thursday. A dealer bought from a customer California 5s of 2025 at 4.85%, down one basis point from where they traded Thursday.

Bonds from an interdealer trade of Massachusetts Health and Education Facilities Authority 5s of 2038 yielded 5.75%, one basis point lower than where they were sold Thursday. A dealer sold to a customer California Statewide Communities Development Authority 5.75s of 2038 at 5.80%, down three basis points from where they were sold Thursday. A dealer sold to a customer insured Puerto Rico Highway and Transportation Authority 5.25s of 2035 at 5.34%, one basis point lower than where they traded Thursday.

"There's not a whole lot going on. It's pretty quiet," a trader in New York added. "We're seeing a little firmness, though. It's pretty much unchanged on the short end, but we could be a basis point or two firmer from about 15 years on out."

The Treasury market showed some gains Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.89%, finished at 3.84%. The yield on the two-year note was quoted near the end of the session at 2.39% after opening at 2.43%. The yield on the 30-year Treasury finished at 4.46% after opening at 4.52%.

In economic data released Friday, industrial production rose 0.2% in July, after a revised 0.4% increase the previous month. Economists polled by IFR Markets had predicted no change in industrial production.

Capacity utilization came in at 79.9% in July, after a 79.8% level the previous month. Economists polled by IFR Markets had predicted 79.8% capacity utilization rate.

The University of Michigan's preliminary August consumer sentiment index reading was 61.7, compared to the final July 61.2 reading. Economists polled by IFR Markets had predicted a 62.0 reading for the index.

A slate of economic data will be released this week. Tomorrow, July housing starts and July building permits will be released, in addition to the July producer price index and the PPI core for July. Then, Thursday, initial jobless claims for the week ended Aug. 16 and continuing jobless claims for the week ended Aug. 9 will be released, along with the composite index of leading economic indicators for July.

Economists polled by IFR Markets are predicting 950,000 housing starts, 925,000 building permits, a 0.5% rise in PPI, a 0.2% increase to the PPI core, 448,000 initial jobless claims, 3.400 million continuing jobless claims, and a 0.2% dip in LEI.

Activity in the new-issue market was light Friday.

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