The municipal market was little changed Friday amid fairly light secondary trading activity and ahead of a long weekend in observance of Memorial Day.
“The market is very, very quiet,” a trader in New York said. “Retail seems to be already out at the beach. It’s very quiet. No activity, very few bids out there right now. It’s unchanged right now. On Tuesday, a lot of new money will be coming in for redemptions, so it’s going to be busy.”
“We didn’t really do much. It’s sleepy,” a trader in Los Angeles said. “The market’s unchanged. We’re hoping to get a lot more activity once everybody is back next week from the three-day weekend. Actually, California will be more active in the primary market, and I would expect the market to be pretty good in the early part of the week.”
The Treasury market showed gains Friday. The benchmark 10-year Treasury note finished at 3.30% after opening at 3.36%. The 30-year Treasury bond finished at 4.21% after opening at 4.25%. The two-year Treasury note finished at 0.77% after opening at 0.88%.
The Municipal Market Data triple-A scale yielded 2.80% in 10 years and 3.66% in 20 years Friday, matching Thursday. The scale yielded 4.00% in 30 years Friday, also matching Thursday.
Thursday’s triple-A muni scale in 10 years was at 83.8% of comparable Treasuries and 30-year munis were at 94.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 98.3% of the comparable London Interbank Offered Rate.
Trades reported by the Municipal Securities Rulemaking Board Friday showed little movement. Bonds from an interdealer trade of Alabama 4s of 2026 yielded 3.94%, even with where they were sold Thursday. A dealer sold to a customer Cleveland 4.75s of 2022 at 3.85%, even with where they were sold Thursday.
A dealer sold to a customer taxable Washington Build America Bonds 5.09s of 2033 at 5.26%, even with where they were sold Thursday. A dealer sold to a customer taxable Milwaukee BABs 5.25s of 2027 at 5.27%, also even with where they were sold Thursday.
A dealer sold to a customer taxable California BABs 7.63s of 2040 at 6.95%, even with where they were sold Thursday. A dealer bought from a customer Utah Transit Authority 5s of 2035 at 4.40%, even with where they were sold Thursday.
Economic data released Friday showed personal consumption expenditures were flat in April, the first month without an increase since September. Disposable personal income rose by the most since December, while personal income increased 0.4%.
Core PCE, which excludes food and energy costs, increased 0.1% for the month and 1.2% from a year ago.
Economists expected consumption to increase 0.3% and for income to increase 0.5%, according to the median estimate from Thomson Reuters.
The Chicago purchasing managers’ business barometer fell to 59.7 in May from 63.8 in April.
Economists polled by Thomson Reuters predicted a 62.0 reading for the indicator.
The University of Michigan’s final May consumer sentiment index reading was 73.6, compared to the 73.3 preliminary May, the final April 72.2 and March’s 73.6. Economists polled by Thomson Reuters had predicted a 73.4 reading for the index.
Priti Patnaik contributed to this column.