Municipal prices firmed in moderate trading yesterday, but the market has paused ahead of next week's new-issue calendars, which will dominate action.
The consumer price index edged up 0.1% in October, right around market expectations, easing some fears from the jump in October producer prices, released Wednesday.
Treasury prices rose heartily on the news but tax-exempts lagged, posting gains of 1/8 point in spots.
In the debt futures market, the December municipal contract jumped 10/32 to 95.18, and the December MOB spread widened to negative 166 from negative 155 Wednesday.
Secondary traders reported an increase in the number of retail and broker bid-wanted lists yesterday and some blocks of bonds have changed hands at aggressive levels, but activity has been limited by new issuance. The trend promises to continue next week as issuers continue to tap the primary sector, which features $106 billion New Jersey Turnpike bonds and $1.2 billion New York City bonds.
"There's been a lot supply, but there's also a lot of money in the system, so customers are finding the product they want in the primary," said one market player. "What's left over is going into the secondary where it's hard to find a market for it."
New-issue activity was relatively light yesterday. Negotiated action was dominated by Bear, Stearns & Co., which tentatively priced and repriced $93 million Reedy Creek Improvement District, Fla. ad valorem tax bonds to raise yields by five basis points on serial bonds from 2001-2008.
The final pricing included serial bonds priced to yield from 4.65% in 1993 to 6.55% in 2008.
A 2016 term is priced as 6s to yield 6.60%.
The bonds are rated Al by Moody's, A-plus by Standard & Poor's and Fitch.
In other action in the primary, Goldman, Sachs & Co., senior manager for $415 million Metropolitan Transportation Authority transit and commuter facilities service contract bonds, freed the issue from syndicate restriction. In secondary trading, the MTA 7s of 2012 were quoted at 98 1/2-7/8 to yield approximately 7.10%, where they were originally priced to yield 7.11%.
In follow through business, Morgan Stanley reported an unsold balance of $68 million on $225 million New York State full faith and credit various purpose bonds.
Merrill Lynch & Co. reported an unsold balance of $35 million from $93 million Dallas, Tex., waterworks and sewer system revenue refunding bonds.
Secondary traders reported increased bid-wanted activity with some large blocks out for the bid.
Among the more active names, California GO bonds were quoted at 6.33% bid 6.35% offered late in the session.
"The secondary isn't sloppy, but there's a lot of people who don't have much to do," said one trader. "It's the calm before the storm, although a lot of stuff is getting traded and re-traded between dealers, and there are some aggressive numbers."
In secondary dollar bond trading, prices were narrowly mixed on the day.
Denver Airport 7 3/4s of 2021 were quoted at 93-1/2 to yield approximately 8.34%. North Carolina Eastner 6 1/2s of 2017 were quoted at 96 3/4-97 1/4 to yield 6.72%. Washington Public Power Supply System 6 7/8s of 2017 were quoted at 99 1/2-5/8 to yield 6.90% and Massachusetts Water Resources Authority 6 1/2s of 2019 were quoted at 95 1/4-3/8 to yield 6.87%.
Short-term note traders marked prices up slightly after the CPI data, but yields were mostly unchanged on the day in quiet trading.
In late secondary trading, Los Angeles Trans were quoted at 4.08% bid, 4.00% offered. March New York State Trans were quoted at 5.00% bid, 4.95% offered, and New York City Rans were quoted at 4.87% bid, 4.82% offered. Texas notes were quoted at 4.08% bid, 4.00% offered in late cash trading.
An issue of $49 million Tucson, Ariz., water system revenue bonds was priced by First Boston.
Serial bonds were priced to yield from 4.60% in 1992 to 6.60% in 2008.
A 2012 term is priced as 6.70 at par and a 2016 term is priced as 6.50s to yield 6.751%.
The issue is rated Al by Moody's and A-plus by Standard & Poor's.
Dain Bosworth as senior manager tentatively priced $35 million Wyoming Student Loan Corp. student loan revenue refunding bonds.
The offering included a 1999 term bond priced at part to yield 6.125%.
The issue is rated AA by Standard & Poor's.