The municipal market was unchanged to slightly firmer Friday amid fairly light secondary trading activity.
"The market is trying to catch up with some of the secondary stuff that didn't trade or was not looked at too much because of all the new issuance," a trader in Chicago said. "People have started to take a look at how to fill gaps where they didn't get their new issues. We can go to the July 1 rollover with plenty of money from June. The sense is that we may be one or two basis points better."
A Los Angeles trader said that the market felt "sleepy" Friday.
"There has been a scattered amount of trades, although they have been fairly close to the offered side," a trader in Los Angeles said. "I think everyone has decided to watch soccer and then go home for the weekend. Earlier in the week, it had a decent feel to it. There were some orders that were being filled up. They still tell us they have money that they want to put it to work, but I don't know what they are waiting for. Next week is July 1, so the coupon-funded money and the refunded money comes in, so it will be more active."
The Treasury market showed some gains Friday. The benchmark 10-year note finished at 3.11% after opening at 3.14%. The 30-year bond finished at 4.07% after opening at 4.10%. The two-year note finished at 0.66% after opening at 0.68%.
The Municipal Market Data triple-A scale yielded 2.90% in 10 years and 3.76% in 20 years Friday, following levels of 2.92% and 3.76% Thursday. The scale yielded 4.05% in 30 years Friday, matching Thursday.
Thursday's triple-A muni scale in 10 years was at 93.9% of comparable Treasuries and 30-year munis were at 99.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 104.1% of the comparable London Interbank Offered Rate.
In economic data released Friday, the University of Michigan's final June consumer sentiment index reading was 76.0, compared to the preliminary 75.5, the final May 73.6 reading, and the final April 72.2. Economists polled by Thomson Reuters had predicted a 75.5 reading for the index.
Real gross domestic product increased 2.7% at an annual rate in the first quarter of 2010, revised down from the 3.0% gain reported last month, as consumer spending was revised lower and imports were revised higher.
The core personal consumption expenditures figure edged up, revised to a 0.7% increase from 0.6% reported last month.
Economists expected no change to the previous 3.0% GDP estimate, according to the median estimate from Thomson Reuters. GDP increased 5.6% in the fourth quarter of 2009 and fell 2.4% for all of 2009.
In a commentary, Diane Swonk, chief economist at Mesirow Financial, wrote that Friday's data "continues to reinforce our view that the economy continues to shift from a reliance on consumption to a reliance on investment and exports. Indeed, the swing in inventories over the quarter accounts for 1.9% of the 2.7% in growth that we saw during the period."
Activity in the new-issue market was light Friday.