Munis Cheapest Since July Versus Treasuries After U.S. Job Data

U.S. municipal yields are the highest since July compared with interest rates on Treasuries, as local debt trailed a fixed-income rally spurred by a weaker- than-projected labor report.

Yields on benchmark munis due in 10 years were 1.93 percent at 10 a.m. in New York, compared with 1.69 percent for comparable-maturity Treasuries, data compiled by Bloomberg show. The ratio between the two interest rates is 114 percent, the highest since July 25.

Treasuries gained after the Labor Department reported that payrolls grew by 88,000 workers in March, the least in nine months. The median forecast of 87 economists in a Bloomberg Survey called for an increase of 190,000. The unemployment rate fell to 7.6 percent, the lowest since 2008.

Issuers from California to Florida plan to sell $10.1 billion of debt next week, the most issuance since December, Bloomberg data show. The cheapening of munis relative to Treasuries will help localities find buyers, said Clark Wagner, fixed-income director at First Investors Management co. in New York, which manages $1.6 billion of munis

“If we go into next week with this market tone, it will be a lot easier to get the deals done,” Wagner said.

To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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