The municipal market was slightly firmer Friday following the rallying Treasury market.
"There's a firmer tone at this point, just because of what Treasuries are doing, but there's not a tremendous amount of follow-through," a trader in New York said. "You could say we're better by a basis point or two at best."
Traders said that while tax-exempt yields were lower by one or two basis points throughout maturities two years and out, bonds maturing in one year saw significant firmness.
"The 2009 bonds are seeing a significant rally," a trader in Los Angeles said. "One-year bonds could be improved by 10 or 12 basis points. But the rest of the curve is looking at one or two mostly."
Trading activity, as reported by the Municipal Securities Rulemaking Board, was light Friday.
The Treasury market showed gains Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.76%, finished at 3.65%. The yield on the two-year note was quoted near the end of the session at 1.94% after opening at 2.06%.
In economic data released Friday, wholesale inventories rose 1.1% in December, after a revised 0.8% uptick the previous month. Additionally, wholesale sales fell 0.7% in December after a revised 1.9% increase. Economists polled by IFR Markets had predicted a 0.3% gain in wholesale inventories and a 0.5% jump in wholesale sales.
A slate of economic data will also be released this week. On Wednesday, retail sales for January will be released, along with December business inventories and business sales. On Thursday, initial jobless claims for the week ended Feb. 9 will be released, in addition to continuing jobless claims for the week ended Feb. 2. On Friday, January import prices will be released, alongside January import prices, January industrial production, January capacity utilization, and the preliminary February University of Michigan consumer sentiment index.
Economists polled by IFR Markets are predicting a 0.3% dip in retail sales, a 0.2% uptick in retail sales excluding autos, a 0.4% rise in business inventories, a 0.5% jump in business sales, 343,000 initial jobless claims, 2.780 million continuing jobless claims, a 0.5% increase in import prices, a 0.1% uptick in industrial production, 81.4% capacity utilization, and a 77.0 Michigan sentiment reading.
The following week, which will be shortened due to the President's Day holiday, will see more data. On Feb. 20, the January consumer price index will be released, in addition to the January CPI core, January housing starts, and January building permits. On Feb. 21, initial jobless claims for the week ended Feb. 16 will be released, along with continuing jobless claims for the week ended Feb. 9, and the January composite index of leading economic indicators.
Economists polled by IFR Markets are predicting a 0.3% rise in CPI, a 0.2% gain in CPI core, 996,000 housing starts, 1.040 million building permits, 340,000 initial claims, 2.760 million continuing claims, and a 0.1% dip in LEI.
Activity in the new-issue market was light Friday. q
