May trading in municipals opened with a weaker tone Friday, continuing a slide that characterized the latter part of April. Traders said that the market was off by a basis point or two in a light trading session.

"They're certainly a little bit weaker, but it's really, really quiet," a trader in Chicago said. "A couple of basis points weaker. It's all going to depend upon what happens with supply, both in Treasuries and munis. People want to see how that goes before they commit too much money."

In the new-issue market this week, supply of $5.46 billion is expected to enter the market, according to The Bond Buyer and Ipreo LLC.

Last week the total supply came in much lower than expected. With Florida's Citizens Property Insurance Corp. deal downsized to $1.64 billion, from $2 billion, and the New Jersey Transportation Trust Fund Authority postponing its $350 million offering after pricing for retail, new-issuance totaled $3.62 billion, according to Thomson Reuters, compared with the $6.28 billion expected.

The market weakened continually throughout the week, falling each day after prices hit a high point for the year the previous Wednesday.

The yield on a triple-A, 30-year general obligation bond fell to 4.35% on April 22 but has since given up 23 points and sat at 4.58% after trading Friday, according to Municipal Market Data.

The market may have overextended on the rally, with some traders saying yields were pushed down too low over fears that taxable Build America Bond issuance would create long-term supply problems for the tax-exempt market.

"We've had a pretty big correction off the high of the last rally," a trader in New York said. "There's not a lot of selling pressure, but there isn't a whole lot of incentive to buy, either. It's kind of in a holding pattern at the moment."

Trades reported to the Municipal Securities Rulemaking Board on Friday were weaker. An interdealer trade of insured New Jersey Health Care Facilities Financing Authority 5.375s of 2029 yielded 4.5%, or 2 basis points more than the previous day.

An interdealer trade of South Carolina's Medical University Hospital Authority 5.25s of 2034 traded at 5.67%, up 3 basis points from Thursday.

Bonds from an interdealer trade of pollution control revenue bonds from Matagorda County, Tex., Navigation District No. 1 yielded 6.56%, up 1 basis point from Thursday.

The Treasury market was also weaker Friday. The yield on the benchmark 10-year note, which opened at 3.12%, closed at 3.19%. The yield on the two-year note closed at 0.94% after opening at 0.9%. The yield on the 30-year bond, which opened at 4.03%, closed at 4.1%.

The Treasury market is expecting an influx of supply, with auctions of $71 billion of notes and bonds set for this week.

In economic data released Friday, the Institute for Supply Management's monthly index came in at 40.1 for April, versus 36.3 in March, but still representing a contracting.

Economists polled by IFR Markets had expected a reading of 38.

Both factory orders and factory orders excluding transportation fell 0.9% in March, according to the Commerce Department. The factory order data was worse than analysts' predictions of a fall of 0.6%.

In addition, the University of Michigan consumer sentiment index registered at 65.1, up from 57.3 in March. That beat the expectations of economists polled by IFR Markets and the preliminary reading, which came in at 65.1.

Data to be released this week includes pending home sales on Monday, first quarter productivity on Thursday, and the April unemployment rate and nonfarm payroll numbers on Friday.

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