The municipal market was unchanged to slightly firmer yesterday after lower-than-expected consumer price index data.
"Immediately after the data, Treasuries improved and munis followed, improving by about two basis points across the scale. But when the stock market started going up, Treasuries turned around, and we started to drift back to unchanged in the muni market," a trader in Los Angeles said. "All in all, there's still a firmer tone in our market, and we're maybe better by a point on the long end, but it's mostly unchanged at this point."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains, but were mostly unchanged. Bonds from an interdealer trade of Arizona's Salt River Project Agricultural Improvement and Power District 5s of 2038 yielded 4.64%, even with where they were sold Tuesday. A dealer sold to a customer New York City Housing Development Corp. 4.85s of 2036 at 4.93%, one basis point lower than where they traded Tuesday. A dealer sold to a customer New Jersey Educational Facilities Authority 4.5s of 2037 at 4.56%, even with where they were sold Tuesday.
The Treasury market showed losses yesterday after its early session gains faded. The yield on the benchmark 10-year Treasury note, which opened at 3.91%, finished at 3.92%. The yield on the two-year note was quoted near the end of the session at 2.52% after opening at 2.48%.
In economic data released yesterday, the consumer price index rose 0.2% in April, after a 0.3% gain in March. Economists polled by IFR Markets had predicted a 0.3% uptick.
The core CPI climbed 0.1% after a 0.2% increase the previous month. Economists polled by IFR had predicted a 0.2% rise.
In the new-issue market yesterday, Goldman, Sachs & Co. priced $538.7 million of certificates of participation for the Miami-Dade County School Board. The COPs mature from 2014 through 2031, with a term bond in 2033. Yields range from 3.56% with a 3.5% coupon in 2014 to 5.03% with a 5% coupon in 2033. They are callable at par in 2018, and are insured by Assured Guaranty Corp. The underlying credit is rated A3 by Moody's Investors Service and A by Standard & Poor's.
Goldman Sachs also priced $264.8 million of electric revenue refunding bonds for Washington's Energy Northwest in three series. Bonds from a $72.3 million series mature from 2009 through 2017, with yields ranging from 2.23% in 2009 to 3.76% in 2017, all with 5% coupons. Bonds from a $128 million series mature from 2010 through 2012, yielding 2.67%, 2.97%, and 3.20%, respectively, all with 5% coupons. And bonds from a $64.5 million series mature from 2009 through 2017, with yields ranging from 2.23% in 2009 to 3.76% in 2017, all with 5% coupons. None of the bonds are callable, and they are rated Aaa by Moody's, and AA-minus by both Standard & Poor's and Fitch Ratings.
Lehman Brothers priced $148.6 million of revenue bonds for the Massachusetts Health and Educational Facilities Authority in two series. Bonds from a $90.1 million series mature from 2008 through 2028, with a term bond in 2033. Yields range from 2.35% with a 4% coupon in 2008 to 5.00% priced at par in 2033. These bonds are callable at par in 2018. Bonds from a $58.6 million series contain two maturities in 2012, both yielding 3.58%, with coupons of 3.5% and 4%. These bonds are not callable. The credit is rated A2 by Moody's.
RBC Capital Markets priced $121.9 million of unlimited-tax school building bonds for Texas' Pflugerville Independent School District. The bonds mature from 2010 through 2029, with a term bond in 2033. Yields range from 2.50% with a 3% coupon in 2010 to 4.70% with a 5% coupon in 2033. The bonds, which are callable at par in 2017, are backed by the Permanent School Fund guarantee program. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's.
Morgan Stanley priced $96.1 million of unlimited-tax school building bonds for Texas' Katy Independent School District. The bonds mature from 2009 through 2028, with term bonds in 2032 and 2038. Yields range from 2.50% with a 4% coupon in 2010 to 4.74% with a 5% coupon in 2038. Bonds maturing in 2009 will be decided via sealed bid. The bonds, which are callable at par in 2018, are backed by the PSF guarantee program. The underlying credit is rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Later this week, more economic data will be released. Today, May's Empire State Manufacturing index, initial jobless claims for the week ended May 10, continuing jobless claims for the week ended May 3, and April industrial production and capacity utilization will be released. Tomorrow, April housing starts and building permits will be released, alongside the preliminary May University of Michigan consumer sentiment index.
Economists polled by IFR Markets are predicting a negative 10.00 level for the Empire State Manufacturing index, 370,000 initial jobless claims, 3.035 million continuing jobless claims, a 0.3% decline in industrial production, 80.1% capacity utilization, 940,000 housing starts, 915,000 building permits, and a 62.5 level for the Michigan sentiment index.