The muni market continued its recent trend of weakening every day, while the October labor data was strong, with non-farm payrolls jumping to 250,000 versus the expected number of 190,000.
“If a December rate hike wasn’t already a given, this pretty much seals the deal I think,” said one New York trader. “Issuance will be extremely light, making allocations even less.”
Ipreo forecasts weekly bond volume will drop to $3.3 billion from a revised total of $5.2 billion in the prior week, according to updated data from Thomson Reuters. There are only seven deals on the schedule $100 million or larger, one of those being a taxable negotiated deal and two competitive deals.
Secondary market
Municipal bonds were weaker on Friday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields rose as much as one basis point in the two- to seven-year and the 10- to 30-year maturities. The remaining four maturities showed yields decreasing.
High-grade munis were weaker, with yields calculated on MBIS' AAA scale rising as much as one basis point in the two- to seven-year and the 10- to 30-year maturities. The remaining four maturities showed yields decreasing.
Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation up by as many as two basis points and on 30-year muni yields increased between one and three basis points.
On Thursday, the 10-year muni-to-Treasury ratio was calculated at 87.7% while the 30-year muni-to-Treasury ratio stood at 100.6%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Week's actively traded issues
Some of the most actively traded munis by type in the week ended Nov. 2 were from Puerto Rico, Texas and California issuers, according to
In the GO bond sector, the Puerto Rico 8s of 2035 traded 42 times. In the revenue bond sector, the Mission, Texas Economic Development Corps. 4.625s of 2031 traded 51 times. And in the taxable bond sector, the California 6.2s of 2019 traded 30 times.
Week's actively quoted issues
New Jersey and Kentucky names were among the most actively quoted bonds in the week ended Nov. 2, according to Markit.
On the bid side, the South Jersey Port Corp. taxable 7.365s of 2040 were quoted by 50 unique dealers. On the ask side, the Paducah, Kentucky, Independent School District’s revenue 3.5s of 2035 were quoted by 290 dealers. And among two-sided quotes, the South Jersey Port Corp. taxable 7.365s of 2040 were quoted by 28 dealers.
Lipper: Muni bond funds see sixth outflow in a row
Investors in municipal bond funds remained cautious and again pulled cash out of the funds during the latest reporting week, according to Lipper data released on Thursday.
The weekly reporters saw $1.320 billion of outflows in the week ended Oct. 31 after outflows of $494.914 million in the previous week.
Exchange traded funds reported inflows of $105.897 million, after outflows of $25.091 million in the previous week. Ex-ETFs, muni funds saw $1.426 billion of outflows, after outflows of $469.823 million in the previous week.
The four-week moving average remained negative at -$826.368 million, after being in the red at -$507.107 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds had outflows of $657.629 million in the latest week after outflows of $368.134 million in the previous week. Intermediate-term funds had outflows of $500.907 million after outflows of $143.005 million in the prior week.
National funds had outflows of $1.008 billion after outflows of $370.522 million in the previous week. High-yield muni funds reported outflows of $511.540 million in the latest week, after outflows of $230.226 million the previous week.
ICI: Long-term muni funds saw $178M outflow
Long-term tax-exempt municipal bond funds saw an outflow of $178 million in the week ended Oct. 24, the Investment Company Institute reported.
This followed an outflow of $1.310 billion in the week ended Oct. 17 and outflows of $1.653 billion, $3 million and $374 million and inflows of $116 million. $30 million, $4 million, $273 million and $531 million in the eight prior weeks.
Taxable bond funds saw an estimated outflow of $6.874 billion in the latest reporting week, after seeing an outflow of $4.327 billion in the previous week.
ICI said the total estimated outflows to long-term mutual funds and exchange-traded funds were $5.794 billion after outflows of $20.821 billion in the prior week.
Previous session's activity
The Municipal Securities Rulemaking Board reported 44,835 trades on Thursday on volume of $16.792 billion.
California, New York and Texas were the municipalities with the most trades, with the Golden State taking 18.385% of the of the market, the Empire State taking 12.582% and the Lone Star State taking 9.364%.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
