Market players will be watching the results of today's key economic indicators after municipal prices fell 1/4 to 3/8 point on average yesterday amid heavy bid-wanted flow.
Prices opened weaker and then began to slide in sympathy with the Treasury market as institutions dumped a variety of product into the secondary sector for the second session in a row.
Traders said bid-wanted flow was heavy and reported increased swaps with recent new deals.
In sizable secondary-market trading, $20 million Denver Airport 8s of 2025 were out for the bid and were rumored to have traded around 8.15%, market sources said. Late in the session, they were quoted at 98 1/4-3/4 to yield 8.10% on the offered side.
Traders also reported $18 million Triborough Bride and Tunnel Authority 7.70s, prerefunded into 1999, out for the id. Sources said the bonds traded around 5.55% and were reoffered late in the day around a 5.45%.
There also were $5 million Tribe insured 6 5/2s of 2017 out for the bid and rumored to have traded around 6.73%. Late in the session, the bonds were quoted at 98 5/8-7/8 to yield 6.71% on the offered side.
In secondary dollar bond activity, prices were quoted down 1/4 to 3/8 near the end of cash trading.
East Bay California 6 1/2s of 2016 were quoted at 98 7/8-99 1/4 to yield approximately 6.56%. New York City Water Authority 7s of 2015 were quoted at 98 5/8-99 to yield 7.08%.
Some bonds fell as much as 1 point, depending on the name and situation, traders said. But activity was orderly, quieting down in the afternoon as market players put action on hold ahead of today's retail sales and producer price index data.
In the debt futures market, the December municipal contract settled down 3/32 to 94.13. The December MOB spread narrowed to 135 from 145 Wednesday.
Underlying strength remained firm, traders said, adding there is plenty of investor demand at the slightly lower levels.
"It's not going to really sell off because we had a little pullback," said David Johnson, a portfolio manager at Van Kampern Merritt. "If we don't get good news from today's data, the market might change its mode for a while, but there is money to be put to work in municipals and the overall perception remains bullish."
New-issue activity was quiet in the primary sector as issuance continued to slow after a rush by issuers before the close of the third quarter. Looking ahead, The Bond Buyer's 30-day visible supply fell $345 million, to $1.31 billion yesterday, down $804 million from last Thursday.
In follow-through business in the competitive sector, Goldman, Sachs & Co., senior management for $120 million Maryland general obligation bonds sold Wednesday, reported an unsold balance of $65.6 million late in the session.
In the negotiated sector, market sources said there was good follow through business on $600 million Denver Airport System revenue bonds, marketed Wednesday by an account led by Lehman Brothers.
"That deal went well," one buyside source said. "The credit has come a long way."
In short-term note activity, yields were unchanged to up five basis points and traders reported a flood of bid wanteds, including $19 million Los Angeles notes and around $100 million March New York State Trans.
In late secondary-market trading, Los Angeles notes were quoted at 4.20% bid, 4.18% offered, while March New York State Trans were quoted at 4.75% bid, 4.70% offered. Texas notes were quoted at 4.20% bid, 4.15% offered, and Pennsylvania paper was quoted at 4.25% bid, 4.205% offered.
Prerefunded bond yields also rose slightly in spots in light trading.
Late in the session prefunded bonds, callable in 1995, were quoted at 5.24% bid, 5.20% offered, while bonds callable in 1996 were quoted at 5.28%, 5.25% offered.
The East Bay Municipal Utility District plans to market two separate offerings on Oct. 29.
The first offering consists of water system subordinated revenue bonds, totaling $130 million. The bonds are rated A1 by Moody's and A-plus by Standard & Poor's.
The second offering consists of wastewater system subordinated revenue bonds, totaling $50 million. The bonds currently carry A ratings from both Moody's and Standard & Poor's.
O'Brien Partners Inc., and Artemis Capital Group Inc. have been tapped as co-financing consultants.
East Bay Mud officials said yesterday that insurance will be available to bidders and that they hope to garner a rating improvement in the coming weeks.
The two deals are expected to be the last priced for about two years, the officials said.