The Bond Buyer's weekly yield indexes rose this week, amid continued market turmoil and uncertainty over a federal bailout package.
"The market is all over the place," said Fred Yosca, managing director and head of trading at BNY Capital Markets. "There are some signs of life here, but I don't know if it's just a head fake or what. You've got all this supply that's supposed to come and hasn't, when that all comes, is it going to bury everything in sight? It's a very difficult environment. Clearly yields are up, but it's hard to say how much."
The municipal market was weaker Friday, despite more flight-to-quality gains in Treasuries, and as negotiations continued on a government bailout plan that could help stabilize the market. The market also last week absorbed the news that JPMorgan Chase & Co. would purchase the banking assets of the failed Washington Mutual.
The new-issue market effectively ground to a halt.However, the secondary market was still functioning, with trading volume not substantially different than before the crisis.
On Monday, the mood turned somber following the House's rejection of the government's $700 billion rescue plan. While munis weakened, market participants said tax-exempts would have probably fallen even further if investors thought that had been the last chance to vote on a rescue plan.
Tuesday, munis were weaker by four or five basis points, in line with Treasuries, which saw a reversal of Monday's steep gains as lawmakers said they would try to salvage the bailout.
Tax-exempts were weaker by two to four basis points Wednesday, as participants continued to await an eventual resolution on the potential bailout plan. The Senate late Wednesday passed this version of the bailout, which now includes the $100 billion tax "extenders" package , and yesterday, munis were unchanged with a firmer tone, with the House set to vote on the revised plan today.
The Bond Buyer 20-bond index of GO yields rose 13 basis points this week to 5.36%. This is the highest level for the index since Dec. 7, 2000, when it was also 5.36%.
The 11-bond index rose 12 basis points this week, to 5.26%. This is its highest level since March 28, 2002, when it was also 5.26%.
The revenue bond index rose 13 basis points this week to 5.69%. Its highest level since Nov. 30, 2000, when it was 5.73%.
The 10-year Treasury note yield fell 23 basis points this week to 3.64%, but it remained above the 3.53% figure set two weeks ago.
The 30-year Treasury bond yield fell 25 basis points to 4.15%. This is the lowest Thursday level for the 30-year bond since The Bond Buyer began tracking it in September 1979.
The Bond Buyer one-year note index rose 25 basis points this week to 2.44%, which is the highest since Jan. 16, when it was 2.57%.
The weekly average yield to maturity on The Bond Buyer 40-bond Municipal Bond Index rose 19 basis points this week to 5.92%. That is the highest since the week ended June 29, 2000, when it was 5.93%.
