The municipal market was weaker Friday after a stronger than expected April non-farm payrolls report.
"We are weaker by maybe three or four basis points, just following Treasuries after that payrolls report," a trader in New York said. "The market had a weaker jobs number priced in, so it caused some Treasury weakness, which has driven us lower some."
Trades reported by the Municipal Securities Rulemaking Board Friday showed losses. A dealer bought from a customer insured Massachusetts School Building Authority 4.75s of 2032 at 4.83%, up four basis points from where they were sold Thursday. Bonds from an interdealer trade of Tennessee Energy Acquisition Corp. 5.25s of 2026 yielded 5.66%, up three basis points from where they traded Thursday. A dealer sold to a customer New York City Municipal Water Finance Authority 5s of 2039 at 4.94%, up four basis points from where they were sold Thursday.
"It was definitely a weaker day," a trader in Los Angeles said. "We went down after the payrolls report, and pretty much stayed there all day."
The Treasury market showed losses Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.77%, finished at 3.86%. The yield on the two-year note was quoted near the end of the session at 2.46% after opening at 2.37%.
In economic data released Friday, employers cut 20,000 jobs in April, after slashing a revised 81,000 the previous month. Economists polled by IFR Markets had predicted that 75,000 jobs were lost in April.
Also in the report, the unemployment rate came in at 5.0% in April, after 5.1% the previous month. Economists polled by IFR had predicted it would be 5.2%.
New factory orders for manufactured goods jumped 1.4% in February. The factory orders increase, to $432.31 billion, was larger than the 0.3% increase projected by IFR and came after a revised 0.9% decrease to $426.40 billion in February.
Excluding transportation, the level of all new manufacturing orders rose 2.2% to about $370.4 billion in March, following a 1.8% drop in January to $361.3 billion. The increase compared to a 2.0% increase projected by IFR Markets.
This week, another slate of data will be released. The April Institute for Supply Management's non-manufacturing business activity composite index will be released today, along with preliminary first quarter unit labor costs and preliminary first quarter non-farm productivity Wednesday. On Thursday, initial jobless claims for the week ended May 3 and continuing jobless claims for the week ended April 26 will be released, along with March wholesale inventories and March wholesale sales.
Economists polled by IFR Markets are predicting a 49.3 level for the ISM non-manufacturing index. They are also predicting a 2.6% rise in unit labor costs, a 1.7% annual rate of non-farm productivity, 370,000 initial jobless claims, 3.000 million continuing jobless claims, a 0.5% rise in wholesale inventories, and a 0.7% gain in wholesale sales.
Activity in the new-issue market was light Friday.
