Yields on 10-year municipals hit another historic low Friday as the muni market was slightly firmer amid fairly light secondary trading activity, while the long municipal scale was at more than 99% of long Treasuries.
“Even on a day like today, where there’s not a ton trading and it’s fairly quiet for the most part, we’re still seeing yields tick lower,” a trader in Los Angeles said. “There’s just this prevailing firmer tone that keeps pushing yields lower and lower. It’s probably only a basis point or two better today, but still, this firmness doesn’t figure to be going anywhere for a while.”
The Municipal Market Data triple-A scale yielded a record-low 2.41% in 10 years and 3.52% in 20 years Friday, following levels of 2.43% and 3.53% on Thursday. The scale yielded 3.86% in 30 years Friday, following 3.87% on Thursday.
“There isn’t a whole lot of activity just yet, but we’re still feeling firmer,” a trader in New York said. “We’re probably better a basis point or two in spots, but it’s fairly quiet.”
Friday’s triple-A muni scale in 10 years was at 89.9% of comparable Treasuries and 30-year munis were at 99.7%, according to MMD. The 30-year tax-exempt triple-A general obligation bonds were at 111.9% of the comparable London Interbank Offered Rate.
The Treasury market showed some gains Friday. The benchmark 10-year note finished at 2.69% after opening at 2.75%. The 30-year bond finished at 3.87% after opening at 3.94%. The two-year note opened and finished at 0.54%.
Trades reported by the Municipal Securities Rulemaking Board Friday mostly showed some gains. Bonds from an interdealer trade of California 4.5s of 2030 yielded 5.11%, down two basis points from where they were sold Thursday. Bonds from an interdealer trade of Washington State 5s of 2023 yielded 2.94%, one basis point lower than where they traded Thursday.
Bonds from an interdealer trade of taxable New York City Transitional Finance Authority Build America Bonds 5.81s of 2030 yielded 5.81%, even with where they traded Thursday.
A dealer bought from a customer insured Kern County, Calif., 5.75s of 2035 at 4.81%, one basis point lower than where they traded Thursday.
In economic data released Friday, the consumer price index increased 0.3% in July on a seasonally adjusted annual rate.
Core prices, excluding food and energy goods, increased 0.1% for the month, in line with economists’ estimates, following a 0.2% increase in June. CPI fell 0.1% in June.
Economists polled by Thomson Reuters expected consumer prices would increase 0.2% and that core prices would increase 0.1% for the month, according to the median estimate.
The University of Michigan’s preliminary August consumer sentiment index reading was 69.6, compared to the final July reading of 67.8.
Economists polled by Thomson Reuters had predicted a 67.0 reading for the index.
Business inventories increased 0.3% in June, following a revised 0.2% increase in May.
May inventories were originally reported as up 0.1%
Retail inventories increased 0.8% for the month, the largest increase since March. Retail inventories excluding motor vehicles were flat.
Economists expected business inventories to increase 0.2%, according to the median estimate from Thomson Reuters.
Activity in the new-issue market was light Friday.