The Bond Buyer's weekly yield indexes declined this week, as tax-exempt yields fell in all but one of the week's sessions.
"The market stayed firm over that period of time, and I was kind of surprised," said Fred Yosca, managing director and head of trading at BNY Capital Markets. "I didn't think the market really had that much going for it, and I had a relatively light position, but I continued to see business. That's still the case. So I'm kind of at a loss to explain it, but there continues to be retail demand. That seems to be what's driving it."
The municipal market was firmer by about two or three basis points Friday in mostly light trading. On Monday, muni yields were again lower, this time by one or two basis points.
On Tuesday, tax-exempts back-tracked a bit, weakening by as much as two or three basis points, following the Treasury market. In the new-issue market, Morgan Stanley priced $363.3 million of revenue bonds for Texas' Lower Colorado River Authority.
On Wednesday, munis were slightly firmer after lower-than-expected consumer price index data showed prices rose less than projected. The consumer price index rose 0.2% in April, after a 0.3% gain in March. Economists polled by IFR Markets had predicted a 0.3% uptick. And, the core CPI climbed 0.1% after a 0.2% increase the previous month. Economists polled by IFR had predicted a 0.2% rise.
In the new-issue market Wednesday, Goldman, Sachs & Co. priced $538.7 million of certificates of participation for the Miami-Dade County School Board.
On Thursday, the municipal market was firmer by about two basis points overall. In the new-issue market, the week's largest transaction was priced, as the Clark County, Nev., School District competitively sold $675 million of general obligation limited-tax building bonds to Merrill Lynch & Co. with a true interest cost of 4.20%.
The Bond Buyer 20-bond index of GO yields fell nine basis points this week to 4.53%, its lowest level since Feb. 14, when it was 4.47%.
The 11-bond index dropped 10 basis points to 4.44%, its lowest level since Feb. 14, when it was 4.38%.
The revenue bond index fell nine basis points to 4.98%, the lowest level since Feb. 21, when it was 4.94%.
The 10-year Treasury note rose four basis points this week to 3.83%, which is the highest since April 24, when it was 3.84%.
The 30-year Treasury bond rose one basis point this week to 4.56%, which is the highest since April 24, when it was also 4.56%.
The Bond Buyer one-year note index fell 11 basis points to 1.82%, which is the lowest since April 23, when it was 1.69%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.01%, down five basis points from last week's 5.06%.
