The Christmas holiday may be right around the comer, but the mood was less than festive in the municipal marketplace yesterday.
Many prices declined for the fifth straight day as buyers continued to bow out of the market. Investors scooped up bonds in a feeding frenzy last week, but they appear content to sit out the market through the holiday, market players said, leaving issuers flocking to the market with yearend refundings with mixed to sour results. Prices declined 1/4 point on average each day this week, pushing yields on The Bond Buyer indexes as much as nine basis points higher,
The market was fairly steady yesterday, and traders reported some retail buying that improved the tone marginally in the morning. The market turned a deaf ear to more signs of economic strength, although Treasury, prices took a hit.
Government traders were pestered by initial state unemployment insurance claims, which fell 7,000 to a seasonally adjusted 330,000 in the week ended Dec. 11. But they were bothered even more by the Philadelphia Federal Reserve's Business Outlook Survey. The report showed the pace of growth in the manufacturing sector jumped in December. The diffusion index for the month was 42.4, up from 22.4 in November.
Current indicators for both manufacturing shipments and new orders showed solid gains.
Employment levels, meanwhile, were reported unchanged this month, but the workweek was longer. Most indices of future manufacturing improved and were at their highest levels since last February.
The report confirmed manufacturing continues to be an engine of growth in the economy. The reports also supported the view 1993 will end on solid footing, with gross domestic product growth of 4.0% or more, analysts said.
The Treasury long bond declined nearly 3/8 point to yield 6.29% near the end of New York trading. Municipal traders reported light to moderate activity and some prices suffered at the hands of the Treasury market. Bonds were quoted mixed overall by the end of the day.
In secondary dollar bond trading, Chicago People's Gas AMT 5 3/4s of 2023 were quoted at 99 1/2-3/4 to yield 5.78%; San Jose 5s of 2020 were quoted at 5.45% bid, 5.40% offered; and Orange and Orlando FGIC 5 1/8s of 2020 were quoted at 5.43% bid, 5.40% offered. Florida Board of Education 5.20s of 2023 were quoted at 96 1/4-1/2 to yield 5.45%.
In follow-through business, the Robinson-Humphrey Co. freed $200 million of Florida Municipal Power Agency revenue bonds to trade,
In late secondary trading, the AM-BAC 5.10s of 2025 were quoted at 5.45% bid, 5.43% offered. where they were originally offered to investors at 5.389%.
Reflecting growing secondary sup ply, The Blue List of secondary dealer inventory rose $95.1 million, to $1.78 billion. The market can look forward to a break from issuance over the holiday's as The Bond Buyer calculated 30-day visible supply at a paltry $3.94 billion.
In the debt futures market, the March municipal contract settled down 6/32 to 102.03. The March MOB spread widened to negative 392 from negative 388 on Wednesday.
New issue activity was light, dominated by Merrill Lynch & Co., which priced and repriced $216 of million New York State Urban Development Corp. correction capital facilities revenue bonds.
At the repricing, yields on bonds due 1999 were lowered by five basis points, while yields were raised by five basis points from 2002 through 2005, by three in 2013 and by about five in 2023.
The final scale included serials priced to yield from 3.50% in 1995 to 5.63% in 2009. A 2013 term was priced as 5 1/4s to yield 5.729% and a 2023 term, containing $112 million, was priced as 5 3/8s to yield 5.786%. The bonds are rated Baal by Moody's, BBB by Standard & Poor's, and A by Fitch.