Top-rated municipal bonds were steady to weaker in light activity at mid-session, traders said, while Treasuries turned narrowly mixed as stocks moved lower after the release of a stronger-than-expected jobs report.
Non-farm payrolls rose 292,000 in December, after rising an upwardly revised 252,000 in November. Economists surveyed by Bloomberg had expected a 200,000 gain in payrolls last month. The December unemployment rate remained at 5.0%.
The yield on the 10-year benchmark muni general obligation was unchanged from 1.75% on Thursday, while the 30-year muni yield was as much as one basis point weaker from 2.69%, according to a read of Municipal Market Data's triple-A scale.
The yield on the two-year Treasury fell to 0.95% from 0.96% on Thursday, while the 10-year Treasury yield dipped to 2.15% from 2.16% and the 30-year Treasury bond yield was unchanged from 2.93%.
Equities lost earlier gains to trade lower at midday. The Dow Jones Industrial Average dropped about 40 points, the Nasdaq Composite Index declined around 10 and the S&P 500 Index was off by almost five.
The 10-year muni to Treasury ratio was calculated on Thursday at 81.3% compared with 81.4% on Wednesday, while the 30-year muni to Treasury ratio stood at 91.9% versus 91.9%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,793 trades on Thursday on volume of $9.72 billion.
Primary Market
Total volume for the upcoming week is estimated by Ipreo at $8.33 billion, consisting of about $6.28 billion of negotiated deals and around $2.06 billion of competitive sales. The total is up from a revised $1.73 billion sold in the prior week, according to Thomson Reuters data.
Most of the attention in the upcoming week will be focused on the city of Chicago and the state of Illinois.
Chicago will be in the market with a $500 million general obligation deal on Tuesday. The issue will consist of tax-exempt refunding and taxable bonds. Citigroup is expected to price the bonds on Tuesday after holding a one-day retail order period on Monday.
The city is rated Ba1 by Moody's Investors Service, triple-B-plus by Standard & Poor's and Fitch Ratings and A-minus by Kroll Bond Rating Agency.
On Thursday, Illinois will competitively sell $480 million of Series of 2016 GOs. The bonds are rated Baa1 by Moody's, A-minus by S&P and triple-B-plus by Fitch.
On the higher rated side, the Illinois Regional Transportation Authority on Wednesday will competitively sell $100 million of Series 2016A GOs. The issue is rated Aa3 by Moody's and AA by S&P and Fitch.
The Trinity Health Credit Group will be coming to market with a $568 million composite offering with bonds coming from four different issuers.
The deal consists of the Michigan Finance Authority's Series 2016MI hospital revenue and refunding bonds; the Connecticut Health and Educational Facilities Authority's Series 2016CT revenue bonds; the Idaho Health Facilities Authority's Series 2016D revenue bonds; and Montgomery County, Md.'s Series 2016MD revenue bonds.
The issue is expected to be priced by Bank of America Merrill Lynch on Tuesday after a one-day retail order period. The bonds are rated Aa2 by Moody's Investors Service, AA-minus by Standard & Poor's and AA by Fitch Ratings.
The California Health Facilities Financing Authority will be offering $500 million of revenue bonds for Sutter Health. The deal is expected to be priced by Morgan Stanly on Wednesday.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $2.65 billion to $13.14 billion on Friday. The total is comprised of $4.78 billion competitive sales and $8.36 billion of negotiated deals.
The Week's Most Actively Quoted Issues
Puerto Rico, Massachusetts and New Jersey were among some of the most actively quoted names in the week ended Jan. 8, according to data released by Markit.
On the bid side, the Puerto Rico Commonwealth GO 8s of 2035 were quoted by 12 unique dealers. On the ask side, the Massachusetts State Transportation Fund revenue 5s of 2044 were quoted by 17 unique dealers. And among two-sided quotes, the New Jersey Tobacco Settlement Financing Corp. revenue 5s of 2041 were quoted by 17 dealers.
The Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended Jan. 8 were in California, New Jersey and Texas, according to Markit.
In the GO bond sector, the California 5s of 2026 traded 34 times. In the revenue bond sector, the New Jersey State Transportation Trust Fund Authority 5s of 2045 traded 46 times. And in the taxable bond sector, the University of Texas 3.852s of 2046 traded 21 times.
Municipal Bond Funds See Inflows
Municipal bond funds saw inflows for the 14th straight week, according to Lipper data released on Thursday.
Weekly reporting funds saw $992.749 million of inflows in the week ended Jan. 6, after inflows of $1.299 billion in the previous week, Lipper said.
The four-week moving average remained positive at $851.299 million after being in the green at $788.604 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced inflows, gaining $496.862 million in the latest week, on top of inflows of $701.681 million in the previous week. Intermediate-term funds had inflows of $316.115 million after inflows of $421.495 million in the prior week.
National funds saw inflows of $924.675 million after inflows of $1.157 billion in the prior week. High-yield muni funds reported inflows of $307.597 million in the latest reporting week, after an inflow of $300.160 million the previous week.
Exchange traded funds saw inflows of $257.265 million, after inflows of $211.200 million in the previous week.
In the week ended Dec. 30, long-term, long-term municipal bond funds saw inflows, according to the Investment Company Institute. Muni funds saw $2.243 billion of inflows after $1,262 billion of inflows in the previous week, ICI reported.
