With the new issuance for the week mostly wrapped up, the municipal market was unchanged yesterday, with mostly light secondary market activity.
“It’s pretty slow,” a trader in New York said. “The new issuance for the week is basically behind us, and there’s just not a whole lot trading. People seem to be on the sidelines for the most part. I’d call it totally unchanged.”
Not every trader was having a quiet day, however.
“I’ve actually had a very busy day trading New York paper,” a second trader in New York said. “ I got the impression that may not be the case in other sectors, but New York paper, at least from my vantage point … I’m having a good day. I’m selling a lot of bonds.
“For the week though, there have been very few bonds for the bid,” the trader continued. “Guys are bringing blocks in, and they’re being carved up and distributed. The bid in the secondary is strong. It’s taking its cue, I guess, from the primary, but it’s fine.”
Trades reported by the Municipal Securities Rulemaking Board yesterday were flat to slightly improved. A dealer sold to a customer California 6s of 2038 at 6.06%, even with where they traded Wednesday. A dealer sold to a customer Houston 5s of 2029 at 5.15%, one basis point lower than where they were sold Wednesday. A dealer sold to a customer insured Louisiana Citizens Property Insurance Corp. 6.125s of 2025 at 6.29%, one basis point lower than where they traded Wednesday. A dealer bought from a customer Wake County, N.C., 5s of 2024 at 3.90%, one basis point lower than where they were sold Wednesday.
A dealer sold to a customer New Jersey Environmental Infrastructure Trust 5.5s of 2022 at 3.90%, down one basis point from where they traded Wednesday. A dealer bought from a customer Maryland Community Development Administration 5.75s of 2039 at 5.78%, even with where they were sold Wednesday. Bonds from an interdealer trade of taxable Milwaukee 6.84s of 2028 yielded 6.62%, two basis points lower than where they were sold Wednesday. A dealer sold to a customer Puerto Rico Electric Power Authority 5.5s of 2038 at 6.86%, even with where they traded Wednesday.
“I’m just not seeing a lot of movement today,” a trader in Los Angeles said. “Maybe there’s a mildly firmer tone out there, just because it’s been firmer the last few days, but I’d call it mostly flat.”
The Treasury market showed losses yesterday as stocks rallied. The yield on the benchmark 10-year Treasury note, which opened at 2.65%, was quoted near the end of the session at 2.75%. The yield on the two-year note was quoted near the end of the session at 0.88% after opening at 0.81%. The yield on the 30-year bond, which opened at 3.50%, was quoted near the end of the session at 3.57%.
The Dow Jones industrial average was up 2.79% or 216.46 to close at 7978.08 after crossing the 8,000-point threshold in intraday trading.
As of Wednesday’s close, the triple-A muni scale in 10 years was at 118.8% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 135.9% of comparable Treasuries. As of the close Wednesday, 30-year tax-exempt AAA-rated GO bonds were at 148.6% of the comparable London Interbank Offered Rate.
In the new-issue market yesterday, Alaska competitively sold $165 million of general obligation bonds to JPMorgan, at a true interest cost of 4.04%. The bonds mature from 2010 through 2029, with yields ranging from 1.20% with a 2.5% coupon in 2011 to 4.50% with a 5% coupon in 2027. Bonds maturing in 2010 will be decided via sealed bid. Bonds maturing in 2028 and 2029 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody’s Investors Service, AA-plus by Standard & Poor’s, and AA by Fitch Ratings.
Oregon’s Tualatin Hills Park & Recreation District competitively sold $59 million of GO bonds to BMO Capital Markets with a TIC of 4.23%. The bonds mature from 2010 through 2029, with coupons ranging from 3% in 2010 to 4,75% in 2029. None of the bonds were formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody’s and AA by Standard & Poor’s.
In economic data released yesterday, initial jobless claims for the week ended March 28 came in at 669,000 after a revised 657,000 for the the previous week. Economists polled by Thomson Reuters had predicted 650,000 initial claims.
Continuing jobless claims for the week ended March 21 came in at 5.728 million after a revised 5.567 million the previous week. Economists polled by Thomson Reuters had predicted 5.600 million continuing jobless claims.
New factory orders for manufactured goods jumped 1.8% in February. The factory order increase, to $352.2 billion, contrasted the 1.5% decrease projected by Thomson and came after a revised 3.5% decrease to $346.120 billion in January. Excluding transportation, the level of all new manufacturing orders fell 1.6% to about $313.7 billion in February, following a 2.4% drop in January to $308.6 billion.
Today, the March unemployment report, containing the non-farm payrolls figure and the unemployment rate, will be released. Economists polled by Thomson Reuters are predicting that 654,000 jobs were lost in March, which would be slightly down from last month’s 651,000 job decline. They are also predicting an unemployment rate of 8.5%, higher than last month’s 8.1%.