"Uncertainty" is the word that best describes the fixed income markets this week. Uncertainty as to the future of the dollar, uncertainty as to inflation and, finally, uncertainty as to whether or not the Federal Reserve would tighten monetary policy.
The municipal markets stabilized after their large decline of last week. Offerings were 20 basis points higher on long bonds than were available two weeks ago. A light calendar also helped to stem this down slide. The Bond Buyer Index pointed up the size of decline during the past two weeks as it moved from 5.59 percent to 5.76 percent.
On Thursday New York State began offering $3.79 billion short-term tax - exempt notes through a syndicate headed by Salomon Brothers. The notes are all due within one year and are expected to return 4.4 percent to 4.9 percent in the various maturities.
Corporates continued to slip a bit more as several issues priced last week had to be freed from syndicate (broken) in order to facilitate sales. The triple A Mountain States Telephone, originally priced to yield 8.72 percent, broke to 8.80 percent; the single A General Telephone of California broke from an 8.90 percent to a 9.00 percent return.
Several of this week's issues were attractively priced and sold out. The triple A Norges Kommunalbank issue, which was guaranteed by the government of Norway, came with a 9.125 percent coupon and was priced at 99.50 percent of face value to return 9.18 percent.
Treasuries fluctuated within a narrow range, governed by Fed expectations. They ended the week being up a few 30 seconds in price.
The calendar for the week of April 10 is moderate, although some sizable issues will be available.
Quality in the municipal area can be found in two competitive triple A issues, the $150 million State of Oregon which sells on Tuesday and the $60 million State of North Carolina issue which opens Wednesday.
A $92 million Pennsylvania Housing Finance Agency with term bonds in 2009 and 2021 will be marketed on Friday by Goldman Sachs.
On Tuesday, an $11 million City of Baltimore, Md. residential financing revenue bond will be offered by Alexander Brown.
Approximately $755 million of Corporates are slated for next week. A triple A $80 million U.S. guaranteed sinking fund issue due in 2001 is set for Wednesday.
Commonwealth Edison Co. tentatively plans to offer competitively 750,000 shares of $100 par preference stock. This issue will be noncallable for five years and has a sinking fund. Occidental Petroleum Corp. will offer three million shares of a sinking fund preferred with five years of call protection. The expected offering price is $25.
Merrill Lynch is expected to offer their second GNMA Series trust fund of 20,000 units at approximately $1,000 per unit. The offering should be made on April 13.
The Treasury slate is light. They will auction three- and six-month bills tomorrow. The Federal Land Bank Agency will offer $1.2 billion of notes on April 11. The offering consists of $600 million due 1/21/80 and $600 million due 10/20/78. Preliminary price talk is 7.75 to 7.8 percent on the short issue and on to 8.05 on the long issue. They will come in minimums of $1,000 and should be available from most brokerage houses.