A stronger-than-expected jobless insurance claims figure pushed municipal prices 1/8 to 1/4 point higher yesterday in moderate trading.
Initial state unemployment insurance claims rose 47,000 to a seasonally adjusted 448,000 in the week ended June 8. That more than reversed the 38,000 decrease the previous week and was more than the 28,000 increase the market expected.
But municipals once again lagged the Treasury sector, which managed gains of 3/8 to 1/2 point.
Trading was generally light, but participants reported some activity around a large number of bid-wanted lists. Although the lists were not sizable, they gave the market "something to chew on," a trader said.
In debt futures trading, the September municipal contract settled up 9/32 to 90-7/32 with the MOB spread closing at negative 88.
Traders said they expect prices to remain stable over the next several weeks due to a lack of economic news.
Several market participants pointed out that cash is still plentiful and that because the market managed a slight move on jobless claims it could move on other minor indicators, including consumer confidence data, to be released next week.
Significant news won't become available until the release of the June employment report on July 5.
"We're going to be in a very narrow trading range here for awhile," said James L. Kochan, head of fixed-income research at Robert W. Baird & Co. "We'll probably see a long bond right around 8 3/8 to 8 5/8 until July. It's hard to see what would move the market one way or the other before then."
During the next month rates will generally move lower as the market encounters data that will show a continuing recession, said William Sullivan, a money market economist at Dean Witter Reynolds.
"Our sense is that within 30 to 60 days the market will collect data that show that the recovery is not as brisk and that we're still in the recession's grip," Mr. Sullivan said. "The data will show that the May data we saw was somewhat aberrational."
Mr. Sullivan cited weak financial indicators, including the money supply, credit, and commodity prices, suggesting that the economy will not get much of a boost anytime soon.
"You can be looking for rates to be lower on Labor Day than today," he added. "You might see the long bond in the 8.10% area."
However, other market observers noted that there has been enough talk of a recovery in the economy that rates will stay high, prompting issuers to come to market earlier than planned.
In light new-issue activity, $100 million Denver, Colo., International Airport System subordinate revenue variable-rate puts were priced by George K. Baum & Co. and Dain Bosworth Inc.
Dain Bosworth tentatively priced $50 million one-year puts to yield 5% in 1992 and three-year puts to yield 6.35% in 1994.
George K. Baum tentatively priced $50 million in one-year puts to yield 5% in 1992.
The issue is backed by a letter of credit agreement with Sumitomo Banking & Trust Co. Ltd. is rated A1/VMIG-1 by Moody's investors Service and AA/A1-plus by Standard & Poor's Corp.
A group including Merrill Lynch as senior manager tentatively priced $35 million Kentucky Development Finance Authority Hospital Facilities revenue bonds for the St. Luke's Hospital.
The offering was comprised of a 2011 term tentatively priced as 7s to yield 7.09% and a 2021 term tentatively priced as 7s to yield 7.14%.
The bonds are insured by MBIA Corp. and are triple-A rated by Moody's and Standard & Poor's.
In competitive new issuance, a $34.39 million New Hampshire Municipal Bond Bank issue was won by Bear, Stearns & Co., Donaldson, Lufkin & Jenrette Securities Corp. and Smith Barney, Harris Upham & Co., as co-managers, with a true interest cost of 6.155%.
The issue is priced to yield from 5% in 1992 to 7.10% in 2011. An unsold balance was not available late yesterday.
The issue is rated A1 by Moody's and A by Standard & Poor's.
In secondary dollar bond trading, New Jersey Turnpike Authority 7.20s of 2018 were quoted up 1/4 to 101 1/4-3/4 to yield 6.91% to the 1999 call. Hawaii AMT airport 7s of 2020 were quoted up 1/8 to 97-1/4 to lower the yield to 7.23%.
Short-term note yields were essentially unchanged on the day as the sector grapples with Street float from the previous session's New York State note deal, traders said.
Merrill Lynch & Co., senior manager for $3.9 billion New York State tax and revenue anticipation notes, freed the notes from syndicate restrictions near mid-session yesterday.
Traders said the notes were trading at 5.20% bid, 5.18% offered near the end of cash, compared to the original 4.95% net.
In the more seasoned note market, December New York State Trans were quoted at 4.45% bid, 4.30% offered, with the market for Los Angeles County Trans at 4.58% bid, 4.55% offered.
Prerefunded bond yields were also unchanged on the session. National names with a 1995 call were quoted at 5.97% bid, 5.93% offered.