Most of The Bond Buyer's weekly yield indexes declined this week, as the municipal market was largely unchanged to slightly firmer through most sessions as investors returned to work from a long weekend.
"Yields are grinding lower. We're certainly not keeping up with the Treasury market, but there is definitely some strength in the market," said George Strickland, managing director and portfolio manager at Thornburg Investment Management. "There's a little bit of spread tightening in some of the sectors that have been beaten up a little bit, like airport bonds. I think it's really just pretty much a little bit of trying to follow Treasuries, but more technical factors. There's some cash out there that evidently needs to be put to work."
Strickland also said that deal flow in the primary market had been very slow recently, leading up to Labor Day.
"But I think the deals are starting to pile up next week, and I think we'll have a heavy calendar through the fall," he said. "I think it's a good week to play it fairly defensively and not chase after these yields."
The municipal market was largely unchanged Friday, as investors departed for a long weekend.
Following the three-day break in observance of Labor Day, tax-exempts were unchanged to firmer by one basis point, as market participants eased their way back.
The market firmed by one or two basis points Wednesday, following the Treasury market, but underperforming it. In the new-issue market Wednesday, New Jersey competitively sold $1.8 billion of tax and revenue anticipation notes to various bidders. Merrill Lynch & Co. won the largest piece, $1.75 billion, with a net interest cost of 1.6107%. Citi took the remaining $50 million with a NIC of 1.6069%.
Yesterday, the municipal market was slightly firmer, as the primary market digested its heaviest slate of long-term supply of the week, with issuers in Massachusetts, Florida, and Puerto Rico coming to market with $1.5 billion of bonds over three transactions. Citi priced $658 million of general obligation bonds for Massachusetts, Merrill priced $584.3 million of tax-exempt and taxable revenue bonds for the Florida Municipal Power Agency, and Morgan Stanley priced $250 million of public improvement bonds for Puerto Rico.
The Bond Buyer 20-bond and 11-bond indexes of GO yields both declined six basis points this week, to 4.62% and 4.52%, respectively. These are their lowest levels since July 10, when the 20-bond index was 4.56% and the 11-bond index was 4.47%.
The revenue bond index fell two basis points this week, to 5.15%, which is the same level as two weeks ago.
The 10-year Treasury note fell 14 basis points, to 3.63%, the lowest since April 10, when it was 3.53%.
The 30-year Treasury bond fell 10 basis points, to 4.27%, which is the lowest since March 19, when it was 4.22%.
The Bond Buyer one-year note index, however, rose two basis points, to 1.60%, which is the highest since Aug. 6, when it was 1.63%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.39%, up eight basis points from last week's 5.31%.
