The municipal market was weaker yesterday, following the Treasury market, which weakened on stronger-than-expected economic data.
Traders said tax-exempt yields were higher by about two or three basis points.
"It's very quiet, but the markets are off," a trader in New York said. "Treasuries are off, after the durable goods numbers came in [yesterday morning] a little better than expected. A couple of arbs are looking to sell into this [muni] market, but other than that, it's very quiet."
Trades reported by the Municipal Securities Rulemaking Board yesterday showed losses. A dealer sold to a customer Ohio Tobacco Settlement Finance Authority 6.5s of 2047 at 7.00%, two basis points higher than where they were sold Tuesday. Bonds from an interdealer trade of Springfield, Mo., 4.75s of 2034 yielded 4.91%, up three basis points from where they traded Tuesday. Bonds from an interdealer trade of insured Massachusetts School Building Authority 5s of 2037 yielded 4.63%, up four basis points from where they were sold Tuesday. A dealer sold to a customer Massachusetts Health and Education Facilities Authority 5.125s of 2033 at 5.27%, up three basis points from Tuesday.
"It's quiet, and everyone's looking at the Treasury market," a trader in New Jersey said. "The market is still new-issue driven, and that market is pretty thin, and it's been pretty thin. I think that's what's holding up this level."
The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.92%, finished at 4.03%. The yield on the two-year note was quoted near the end of the session at 2.63% after opening at 2.50%.
In economic data released yesterday, durable goods orders fell 0.5% in April, after an unrevised 0.3% decrease the previous month. Economists polled by IFR Markets had predicted a 1.1% decline in durable goods orders.
Durable goods orders excluding transportation climbed 2.5% in April, after a revised 1.7% uptick the previous month. Economists polled by IFR had predicted a 0.7% drop in durable goods orders excluding transportation.
In the new-issue market yesterday, Dallas competitively sold $158.7 million of waterworks and sewer system revenue refunding bonds to Citi with a true interest cost of 4.57%. The bonds mature 2008 to 2030, with term bonds in 2033 and 2037. Yields range from 2.32% with a 4% coupon in 2010 to 4.60% with a 5% coupon in 2033. Bonds maturing in 2008, 2009, from 2022 through 2029, and in 2037 were not formally re-offered. The bonds, which are callable at par in 2018, are rated at Aa2 by Moody's Investors Service and AAA by Standard & Poor's.
Morgan Stanley priced $156.2 million of refunding revenue bonds for the California Health Facilities Financing Authority. The bonds contain two maturities in 2040. A $70.5 million chunk yields 1.80% priced at par, and has a mandatory tender in June 2009. Also, an $85.7 million maturity yields 3.45% priced at par, with a mandatory tender in June 2011. The credit is rated A1 by Moody's, A by Standard & Poor's, and AA-minus by Fitch Ratings.
Goldman, Sachs & Co. priced $137.5 million of hospital revenue bonds for Aurora, Colo., in two series. Bonds from the $68.75 million Series 2004C and 2004D mature 2008 through 2023, with term bonds in 2028 and 2033. Yields range from 2.39% with a 4% coupon in 2009 to 4.9% with a 5% coupon in 2033. Bonds maturing in 2008 will be decided via sealed bid. The bonds are callable at par in 2018, and are insured by Financial Security Assurance Inc. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's.
Citi priced $133.4 million of water revenue refunding bonds for the Southern California Metropolitan Water District. The bonds mature from 2009 through 2022, with yields ranging from 2.20% with a 4% coupon in 2010 to 4.06% with a 5% coupon in 2022. Bonds maturing in 2009 will be decided via sealed bid. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.
Lehman Brothers priced $127.7 million of sales tax revenue bonds for the Riverside County, Calif., Transportation Commission. The bonds contain two maturities in 2029, both yielding 2.63%, with coupons of 5% and 4%. The bonds, which are not callable, are rated Aa2 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.
Morgan Stanley also priced $69.9 million of gas utility distribution system second-lien revenue refunding bonds for Indianapolis. The bonds mature 2009 through 2021, with yields ranging from 2.27% with a 4% coupon in 2009 to 4.29% with a 5.25% coupon in 2021. The bonds, which are not callable, are insured by Assured Guaranty Corp. The underlying credit is rated A2 by Moody's and A-plus by Standard & Poor's.
More economic data will be released as this holiday-shortened week continues. On tap today are the preliminary first-quarter gross domestic product reading, initial jobless claims for the week ended May 24, and continuing jobless claims for the week ended May 17. Tomorrow will see the release of April personal income, April personal consumption, the April core personal consumption expenditures deflator, the May Chicago purchasing managers index, and the final May University of Michigan consumer sentiment index.
Economists polled by IFR are predicting 1.0% growth in GDP, 370,000 initial jobless claims, 3.085 million continuing jobless claims, a 0.2% rise in personal income, a 0.2% increase in personal consumption, a 0.1% uptick in the core PCE deflator, a 48.5 reading for the Chicago PMI, and a 59.5 reading for the Michigan sentiment index.
