The municipal market was unchanged to slightly firmer Friday amid fairly light secondary trading activity.
“The Treasury is rallying on that payrolls number, but we’re really not following for the most part,” a trader in New York said. “We’re maybe picking up a basis point or two in spots, but it’s just quiet.”
“We are not following the Treasuries,” a trader in Los Angeles said. “There was some activity in the morning in reaction to the unemployment numbers and the Treasury pop, but not now. The numbers were pretty bad, although they were below expectations, but the muni market has had a muted response to it.”
The Treasury market showed gains Friday. The benchmark 10-year Treasury note finished at 3.20% after opening at 3.36%. The 30-year Treasury bond finished at 4.13% after opening at 4.27%. The two-year Treasury note finished at 0.73% after opening at 0.81%.
The Municipal Market Data triple-A scale yielded 2.81% in 10 years and 3.67% in 20 years Friday, following levels of 2.82% and 3.67% Wednesday. The scale yielded 3.99% in 30 years Friday, versus 4.01% Thursday.
Thursday’s triple-A muni scale in 10 years was at 83.7% of comparable Treasuries and 30-year munis were at 93.7%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 97.6% of the comparable London Interbank Offered Rate.
In economic data released Friday, nonfarm payrolls increased 431,000 in May, less than economists estimated, but the strongest monthly gain in more than 10 years. The unemployment rate fell to 9.7%. Workers hired for the 2010 Census accounted for more than 95% of the nonfarm payroll gain, bringing the total temporary census staffing to 564,000.
Economists polled by Thomson Reuters expected nonfarm payrolls to increase by 503,000 in May and for the unemployment rate to decline to 9.8%, according to the median estimate.
Trades reported by the Municipal Securities Rulemaking Board Friday were flat to slightly firmer. Bonds from an interdealer trade of insured Honolulu 5.25s of 2024 yielded 2.22%, even with where they were sold Thursday. A dealer bought from a customer insured Los Angeles Unified School District 4.5s of 2025 at 4.64%, one basis point lower than where they were sold Thursday.
Bonds from an interdealer trade of Puerto Rico Electric Power Authority 5s of 2025 yielded 4.75%, one basis point lower than where they were sold Thursday. Bonds from an interdealer trade of insured Illinois 5s of 2025 yielded 4.52%, even with where they were sold Thursday.
A dealer sold to a customer taxable Dallas Hospital District Build America Bonds 5.62s of 2044 at 5.26%, even with where they were sold Thursday. A dealer sold to a customer insured California 5.375s of 2024 at 5.68%, even with where they were sold Thursday.
Bonds from an interdealer trade of taxable California State Public Works Board 7.004s of 2035 yielded 6.53%, down one basis point from where they were sold Thursday. A dealer bought from a customer insured Massachusetts Bay Transportation Authority 4s of 2033 at 4.17%, even with where they were sold Thursday.
Activity in the new-issue market was light Friday.
Priti Patnaik contributed to this column.