The municipal market was weaker Friday by two or three basis points, picking up where it left off Thursday.
“The story of this week has basically been us reversing the gains we’d seen over the previous few weeks,” a trader in New York said.
“We’ve just been weakening pretty steadily just about the entire week, and I’m not sure it’s not going to continue for a while longer. Nobody’s really buying anything, and it’s not a great time for people to be bringing deals into the market. This was bound to happen after we dropped down to record low yields, but that doesn’t make it any easier.”
“We’re a bit weaker again,” a trader in San Francisco said. “We’re probably down a good three basis points, maybe a little more, maybe a little less, in spots. It’s just been a pretty rough week out in muniland. We’ve definitely seen weakness set back into the market in a big way this week.”
The Treasury market showed losses Friday. The yield on the benchmark 10-year note, which opened at 3.25%, was quoted near the end of the session at 3.38%.
The yield on the two-year note was quoted near the end of the session at 0.97% after opening at 0.88%. The yield on the 30-year bond, which opened at 4.09%, was quoted near the end of the session at 4.22%.
As of Thursday’s close, the triple-A muni scale in 10 years was at 87.1% of comparable Treasuries, according to Municipal Market Data, and 30-year munis were 99.0% of comparable Treasuries. Also, 30-year tax-exempt triple-A general obligation bonds were at 99.2% of the comparable London Interbank Offered Rate.
Trades reported by the Municipal Securities Rulemaking Board Friday showed losses. A dealer sold to a customer Metropolitan Water District of Southern California 5s of 2039 at 4.21%, up one basis point from where they traded Thursday.
Bonds from an interdealer trade of Los Angeles Unified School District Build America Bonds 5.75s of 2034 yielded 5.93%, three basis points higher than where they were sold Thursday.
A dealer sold to a customer Lower Paxton, Pa., BABs 6.345s of 2039 at 6.07%, up three basis points from where they traded Thursday.
A dealer sold to a customer University of Arkansas 4s of 2029 at 4.09%, four basis points from where they were sold Thursday.
A dealer bought from a customer Phoenix BABs 5.27s of 2.34 at 5.27%, up one basis point from where they traded Friday.
The economic calendar was light Friday.
Activity in the new-issue market was light Friday.