The municipal market was mostly unchanged Friday in light trading activity following a barrage of new issuance this week.
"There's not a whole lot going on," a trader in New York said. "It's fairly quiet. I think people are just sort of winding down from the big calendar. We handled the supply pretty well; there was enough appetite out there to meet the supply, so that was positive. As for today, though, it's pretty quiet and pretty flat. There's maybe a touch of weakness on the long end, but I'd call it flat."
"We're virtually unchanged, but the short end firmed maybe a tiny bit, and the long end is slightly off," a trader in Los Angeles said. "I'm not really sure it's enough to move the scale, in either direction, but that's how we were leaning. Overall though, we're pretty flat, not a lot of activity."
The Treasury market showed gains Friday as equities sold off. The yield on the benchmark 10-year note opened at 3.50% and was quoted near the end of the session at 3.40%. The yield on the two-year note opened at 0.98% and was quoted near the end of the session at 0.91%. The yield on the 30-year bond was quoted near the end of the session at 4.24% after opening at 4.33%. The Dow Jones industrial average fell 249.85, or 2.51%.
Friday's Municipal Market Data triple-A scale yielded 3.03% in 10 years and 3.82% in 20 years, following levels of 3.05% and 3.81%, respectively, on Thursday. The scale yielded 4.23% in 30 years on Friday following Thursday's level of 4.22%.
As of Thursday's close, the triple-A muni scale in 10 years was at 87.9% of comparable Treasuries, according to MMD, while 30-year munis were 98.1% of comparable Treasuries. As of Thursday's close, 30-year tax-exempt triple-A general obligation bonds were at 100.0% of the comparable London Interbank Offered Rate.
In economic data released Friday, the University of Michigan's final October consumer sentiment index reading was 70.6 compared to the preliminary October 69.4 reading. Economists polled by Thomson Reuters had predicted a 70.0 reading for the index.
The Chicago Purchasing Managers' Business Barometer rose to 54.2 in October from 46.1 in September. Economists polled by Thomson Reuters predicted a 48.9 reading for the indicator.
Personal spending declined 0.5% in September, in line with analysts' estimates, while core PCE was up 0.1% in the month as consumption expenditures retreated from an eight-year high in August. The September decline was the largest decrease since December 2008 and followed an upwardly revised 1.4% increase in personal spending in August.
PCE was initially reported up 1.3% for August. Personal income was flat in September following a 0.1% increase in August. Total PCE is down 0.5% from a year ago. Economists expected consumption to drop 0.5% in September and for incomes to be flat, according to the median estimate provided by Thomson Reuters. The core PCE deflator was expected to be 0.2%.
Activity in the new-issue market was light Friday.