Prices were narrowly mixed yesterday ahead of today's jobs report, while market players also braced for a wave of new deals expected next week.
New issuance and secondary trading were light as the market idled ahead of today's October unemployment report.
Credit market participants expected the data to reflect a mild improvement in the nonfarms jobs sector, which would likely have little effect on prices.
But a surprise number would have more profound ramifications for bonds and could reset near-term price prospects.
"The Street expects the number to show the economy is bouncing, so it should be no surprise," a trader said. "Increasing supply has got some people worried, but the accounts seem to have cash flow. It feels like we're trapped in a narrow range."
New-issue calendars are growing, mainly because issuers are eager to refund outstanding high-coupon debt in favor of current yields, which are comparatively low.
Many market players argued the supply would be met with ample demand. But rumors were also circulating that a myriad of sizable refunding deals are in the works and could put more pressure on prices.
Traders speculated that the New York State Urban Development Corp. may price as much as $1 billion, the Triborough Bridge and Tunnel Authority plans to price $640 million, and an $879 million issue by the Metropolitan Pier and Exposition Authority for the McCormick Place Expansion Project in Illinois is also expected.
Last month, refundings totaled $7.81 billion, or 55% of all new issues in November, compared with $6.41 billion, or 45%, for new money.
Refundings in November were up 13% from the $6.89 billion sold in October and rose 3% from the $7.58 billion in November 1991.
PNC Securities tentatively priced $110 million of Allegheny County, Pa., Hospital Development Authority, Pennsylvania Health Center revenue refunding bonds for the Presbyterian University Health System Inc.
The offering included serial bonds priced to yield from 3.50% in 1994 to 6% in 2004. A 2012 term was priced as 6s to yield 6.30% and a 2023 term was priced as 6s to yield 6.40%.
The bonds are insured by the Municipal Bond Investors Assurance Corp. and are rated triple-A by Moody's Investors Service and Standard & Poor's Corp.
Morgan Stanley & Co. as senior manager priced and repriced $93 million of Massachusetts Port Authority revenue bonds.
At the repricing, Series 1992-A yields were lowered by five basis points from 2001 through 2023. Series 1992-B yields were lowered by five to 10 basis points.
The final reoffering included $47 million of Series 1992-A bonds, subject to the alternative minimum tax, priced to yield from 3.50% in 1994 to 6.15% in 2007. A 2013 term was priced as 6s to yield 6.35% and a 2023 term was priced as 6s to yield 6.40%.
The offering also included $45 million of Series 1992-B bonds, not subject to the AMT, priced to yield from 3.30% in 1994 to 6% in 2007, 6.25% for term bonds in 2013 and 6.30% for term bonds in 2023.
The managers said they expected Moody's to rate the issue Aa and Standard & Poor's to rate the deal AA-minus.
Goldman, Sachs & Co. freed $472 million of Massachusetts Water Resources Authority general revenue refunding bonds from syndicate restrictions.
In late secondary trading, the 5 1/2s of 2015 were quoted at 88 1/4-1/2 to yield 6.50%. The bonds were originally priced to yield 6.52%.
The market got a look at more economic data showing mild strength, but the reports fell by the wayside ahead of today's more important jobs data.
Initial state unemployment insurance claims fell 12,000, to a seasonally adjusted 362,000, in the week ended Nov. 21, the Labor Department reported.
New orders for manufactured goods surged 1.7% in October, the largest monthly gain since June, while inventory levels edged down 0.1%, the Commerce Department reported.
Nonfarm productivity increased at a 3.0% annual rate in the third quarter, seasonally adjusted, according to a revised estimate from the Labor Department.
Traders said secondary activity was subdued and prices were quoted narrowly mixed on the day.
In the debt futures market, the March municipal contract settled up 3/32 to 95.18, while the MOB spread widened to negative 216 from negative 214 Wednesday.
In secondary dollar bond trading, New York City Water and Sewer 63/8s of 2022 were quoted at 97 3/4-98 1/4 to yield 6.54%; MBTA 6. 10s of 2023 were quoted at 95 1/8-3/8 to yield 6.46%; and Georgia MEAG 6 3/8s of 2016 were quoted at 99-lock to yield 6.45%.
Dallas-Fort Worth American Airlines AMT 7 1/4s of 2030 were quoted at 99 1/2-par to yield 7.28%; North Carolina Catawba 6 1/4s of 2015 were quoted at 98-1/4 to yield 6.41%; and Denver Airport AMT 6 3/4s of 2022 were quoted at 95-3/8 to yield 7.15%.
Short-term note yields fell 10 basis points yesterday, continuing a week-long trend with supply thin and demand higher, traders said.
The Bond Buyer's one-year note index fell 28 basis points, to 2.56% yesterday, a record low.