The municipal market was slightly firmer Friday. Traders said tax-exempt yields were lower by two or three basis points overall.
“We’re doing a bit better,” a trader in New York said. “We’re probably better a couple basis points, maybe two or three overall. The gains are mostly on the long end, but we’re seeing one or two basis point gains in the intermediate maturities too. The short end is still pretty flat, though. It’s pretty much just a quiet Friday, though — people are more or less sitting on the sidelines, waiting for some new paper to come into the market.”
“It’s pretty quiet, but I’m definitely seeing some gains,” a trader in San Francisco said. “I’d say we’re improved three basis points or so out long, and maybe two basis points 10 years to 20 years. Inside of that, it’s pretty quiet, pretty unchanged.”
“There’s not a whole lot of activity out there,” a trader in New Jersey said. “It’s still pretty quiet, but it’ll probably pick up next week as the calendar picks up. But we’re showing some nice gains on the long end, we have for the past few days, too, probably better at least two basis points or so out there.”
The Treasury market mostly showed gains Friday, though the short end showed some losses. The yield on the benchmark 10-year note, which opened at 3.35%, was quoted near the end of the session at 3.34%. The yield on the two-year note was quoted near the end of the session at 0.90%, after opening at 0.88%. The yield on the 30-year bond, which opened at 4.20%, was quoted near the end of the session at 4.17%.
As of Thursday’s close, the triple-A muni scale in 10 years was at 85.0% of comparable Treasuries, according to Municipal Market Data, while 30-year munis were 99.5% of comparable Treasuries. As of Thursday’s close, 30-year tax-exempt triple-A general obligation bonds were at 103.8% of the comparable London Interbank Offered Rate.
In economic data released Friday, import prices climbed 2.0% in August, after a 0.7% decrease the previous month. Economists polled by Thomson Reuters had predicted a 1.0% rise.
The University of Michigan’s preliminary September consumer sentiment index reading was 70.2, compared to the final August reading of 65.7. Economists polled by Thomson had predicted a 67.0 reading for the index.
Inventories at the wholesale level fell 1.4% in July as sales increased 0.5%. The drop in inventories follows a downwardly revised 2.1% drop in June. Economists had expected inventories to drop 1.0% and for sales to increase 0.5%, according to the median estimate from Thomson Reuters.
Activity in the new-issue market was light Friday. Final pricing details were released on RBC Capital Markets’ $249.7 million sale for the New Mexico Educational Assistance Foundation, which priced late Thursday. Bonds from the $190.6 million Series B, which are not subject to the AMT, mature in 2010 and from 2015 through 2030. Yields range from 2.93% with a 4% coupon in 2015 to 3.92% with a 4% coupon in 2020. Bonds maturing in 2010 were not formally re-offered. The bonds are not callable.
Bonds from the $59.1 million Series C, which are subject to the AMT, mature in 2010, 2014, and 2015, yielding 3.90% in 2014 and 4.10% in 2015, both priced at par. Bonds maturing in 2010 were not formally re-offered. The bonds are not callable. The credit is rated triple-A by both Moody’s Investors Service and Fitch Ratings.
