Investors started out the shortened trading week on shaky footing, but markets were up on Friday morning after the S&P 500 closed near its record high on Thursday. Things went south on Friday afternoon, however, and the major indexes all finished off the week with small losses. In macro news, The Philadelphia Federal Reserve's index of manufacturing activity showed that manufacturing had contracted, coming in at -6.3 versus the expectation of 8. Investors seemed to take this news in stride, and severe winter weather was blamed for the low figure. In real estate news, existing home sales for January were released, coming in at 4.62 million versus the expectation of 4.67 million, marking a fall of 5.1% to the lowest level in a year and a half. Initial jobless claims came in slightly higher than expected at 336,000, compared to the consensus of 335,000. In the bond world, 10-Year Treasury yields increased steadily through the week, closing on Thursday at 2.76. Below, we look at all of Moody's municipal bond upgrades and downgrades from the past week.

Upgrades

• Chestertown Fire District, NY: Moody's upgraded this district to A2 from Baa1. The A2 rating incorporates the district's modest tax base with seasonal economy, adequate financial operations, and low direct debt burden.
• Knox County, ME: Moody's upgraded this county to Aa2 from Aa3. The Aa2 rating reflects the county's stable financial position with healthy reserve levels, a sizable tax base marked by below-average demographics, and minimal debt burden. Our upgrade is the result of recent improvements in county financial operations that have improved balance sheet cash and bolstered General Fund reserves.
• Tift County, GA: Moody's upgraded this county to Aa2 from Aa3. The upgrade reflects the county's ample fund balance and cash position, which are bolstered by conservative budgeting practices and positive operating trends, and the low debt and pension burdens. The Aa2 rating also incorporates the county's moderately sized tax base with below average socioeconomic factors.
• Orange County Sanitation District, CA: Moody's upgraded this district to Aa2 from Aa2. The upgrade to Aa1 from Aa2 reflects improvements to the district since the last review as well as the continued stability of the district's credit profile.
• Jefferson County, AL: Moody's upgraded to Ba3 from Caa3 the rating on Jefferson County's (AL) $89.6 million in outstanding Series 2003-A and 2004-A general obligation limited tax debt, to B1 from Ca the rating on $78.4 million in outstanding lease revenue warrants issued through the Jefferson County Public Building Authority and to Ba3 from B3 the rating on $726 million in outstanding limited obligation school warrants. Moody's has also upgraded to Ba3 from Caa3 the county's outstanding issuer rating. The rating upgrades to Ba3 and B1 on the general obligation and lease revenue debt reflect the county's recent exit from Chapter 9 bankruptcy. The upgrades acknowledge the substantial structural improvements that the county has made in terms of its debt and operating cost structure, the restoration of financial reserves, and the relative strengths of its economic base.
• Birmingham-Jefferson Civic Center Authority, AL: Moody's upgraded this authority to Baa1 from Ba3. The upgrade to Baa1 reflects solid annual debt service coverage, satisfactory legal protections for warrant holders and the sizeable county/city economic base, which is a primary institutional and commercial center for the state.

Downgrades

• Town of Halfmoon, NY: Moody's downgraded this town to Aa3 from Aa2. The Aa3 rating reflects the town's reduced financial position that has experienced a five year decline in reserves to mitigate consecutive years of operating deficits attributed to diminished economically sensitive revenues.
• Las Animas County School District No. 1 (Trinidad), CO: Moody's downgraded this district to A2 from A1. The A2 rating primarily reflects the district's low debt profile, below average wealth levels, declining tax base, economic concentration, and state funding-related financial pressures.
• Chippewa Hills School District, MI: Moody's downgraded this district to A1 from Aa3. The A1 rating reflects the district's narrow General Fund reserve position and limited budgetary flexibility. The rating also incorporates the district's gradually declining enrollment, moderately sized tax base that has experienced recent valuation declines, below average demographic profile, low debt burden and exposure to an underfunded cost-sharing retirement plan.
• Elmhurst Memorial Healthcare, IL: Moody's downgraded this organization to Aa3 from Aa2. Moody's has evaluated the Bonds based on a joint default analysis (JDA) which reflects Moody's approach to rating jointly supported transactions. JDA incorporates: (i) the long-term rating of the Bank and the Elmhurst Memorial Healthcare (the Obligor), (ii) the probability of default in payment by both parties, and (iii) the structure and legal protections of the transaction which provide for timely debt service payments.
• Pflugerville, TX: Moody's downgraded this town to A1 from Aa2. The downgrade to A1 reflects unusual and additional risk to the city from its guarantee of a $23.5 million loan for a non-essential government service and the loan's ascending repayment structure which contains a bullet maturity in excess of $20 million.
• Beaumont Independent School District, TX: Moody's downgraded this school district to A1 from Aa2. The downgrade to A1 reflects severe governance problems plaguing Beaumont Independent School District (BISD), including lack of internal controls, a divided board, as well as allegations of fraud and multiple pending investigations.
• Smyth County, VA: Moody's downgraded this county to A2 from A1. The downgrade of the underlying rating to A2 reflects narrowing of the county's reserves to a level more comparable to other A2 counties and elevated debt burden. The rating also incorporates the county's moderately sized and stable tax base and below average socioeconomic profile. The stable outlook on the county's underlying rating reflects the county's stable economy and our expectation that the reserves will remain narrow but satisfactory moving forward.