Municipal prices stabilized yesterday, after falling on last week's jobs data, while market players wait for Friday's producer price index data.
Friday, the June unemployment rate rose 0.1-point, to 7%, and non-farm payrolls fell 50,000, much more than expected, and tax-exempt prices fell 3/8 to 1/2 point. The Treasury sector continued to slide yesterday, but municipals held in with prices ending narrowly mixed on the day.
Reflecting municipals stronger showing, the September municipal futures contract settled up 11/32 to 90.28 with the September MOB spread narrowing to negative 41.
Investor demand seems to be holding, traders said, but secondary supply is down and this week's new issue calendar is relatively light, lending to inactivity exacerbated by the holiday.
Traders reported some activity around several small bid-wanted lists and some quoted bonds regained 1/8 point.
"It's trading like it doesn't want to go down and that most of the damage was done Friday," said one New York trader, who cited the market's superior technicals. "Unless something happens with the auction we should sail right into the PPI number in good shape."
The June producer price index will be released Friday, but economists are expecte only a small increase, and some say the favorable inflation outlook could give prices a boost in the weeks ahead.
In secondary trading, activity was light, but New York City bonds traded up as much as 1/2 point in price on thin volume. Traders said bonds changed hands between 8.25 to 8.35%, for long bonds, depending on the coupon.
In light new-issue activity in the negotiated sector, a group led by Smith Barney, Harris Upham & Co. tentatively priced and then repriced $37.5 million St. Petersburgh, Florida public utility refunding revenue bonds to lower most yields five basis points.
The offering included serials priced to yield from 4.60% in 1991 to 6.80% in 2005.
The issue is rated Aa by Moody's Investors Service and AA-minus by Standard & Poor's Corp.
Looking ahead, the 30-day visible supply totals $3.11 billion, up $208 million from Friday, and up $176 million from last Monday.
Only $493 million in long-term bonds were sold last week.
Standard & Poor's Corp.'s Blue List fell to $1.12 billion yesterday, down $354 million from last Monday. The Bond Buyer placement ratio--the percentage of the dollar volume of the week's new competitive issues placed with permanant investors -- hit a new high for the year of 97.0% last week.
Scheduled bond sales for the week total $1.39 billion. While that's up from last week's paltry $261 million, it's down $1.03 billion for the 7-week average covering May 10 -- June 21 of $2.42 billion.
In secondary dollar bond trading, Florida State Board of Education 7 1/4s of 2023 were quoted down 1/4 point to 101 3/4-102 to yield 7.03% to the 2004 par call.
New Jersey Turnpike Authority bonds still hold a 1 point lead on other names because of the announced refinancing of all Turnpike Authority debt. The 7.20s of 2018 were quoted unchanged on the day at 102 5/8-103 to yield 6.99% to the par call in 1999. Triborough Bridge and Tunnel Authority 7s of 2020 were unchanged at 97 3/4-lock to yield 7.185%, while South Carolina Public Service Authority 7.10s of 2021 were down 1/4 to 98 7/8-99 to yield 7.18%.
Short-term note yields were unchanged to up 10 basis points in spots, traders said. March New York State Trans were quoted at 5.23% bid, 5.20% offered near the end of cash, while December New York State Trans were quoted at 4.65% bid, 4.60% offered. Los Angeles Co., Calif., notes were quoted at 4.60% bid, 4.58% offered. New Jersey notes were offered at 4.70% in late trading.
Prerefunded bond traders said that yields were mostly unchanged in light trading. Prerefunded bonds with national names, callable in 1995, were quoted at 5.93% bid, 5.90% offered at the end of cash trading.