2:55PM Little reaction to court ruling in Calif. muni bonds by Rachel Koning
CHICAGO (CBS.MW) -- California bond yields showed little reaction Monday to a federal court ruling delaying the state's recall because of controversy surrounding punch-card ballots and the lengthy candidate list. Municipal-bond traders said that in general the market doesn't view the ballot issue as having a lasting impact on the recall. One trader said intermediate-maturity notes were trading at about a 40-basis-point spread over lower-risk Treasury debt, near levels seen before the court ruling was announced. One analyst said the market has been showing limited reaction to daily changes in the election outlook, as confidence among bondholders has grown for the recall's being voted down Oct. 7 or the election of Democrat Cruz Bustamante, the state's lieutenent governor. In either case, then, the muni market would be more upbeat that state budget progress would win out over political wrangling, the trader said.
I have been saying the same thing on the recall threads for some time. It only takes some simple, reasonable analysis to come to that conclusion given the apparent irreconcilable breach among Republicans.