The Bond Buyer’s weekly yield indexes rose this week amid light trading in the secondary market, as a flood of issuance in the new-issue market captured participants’ attention and focus.
“It was very much a new-issue driven week, and [the deals have] done well,” said Evan Rourke, portfolio manager at Eaton Vance. “It felt like going into this week, there was still cash on the sidelines, and that [handling the supply] really wouldn’t be a problem, and I think that we demonstrated that. The market absorbed the supply, I think, relatively painlessly.”
“You a have a little bit of a steepening of the curve, and somewhat of a subdued secondary market,” Rourke said. “You had kind of a relatively quiet muni market in comparison to some of the volatility in, say, stocks and Treasuries. Part of that is just new issues soaking up cash, but we still had enough cash flow in the market not to cause anything to retrench.”
Primary issuance dominated, led by two offerings in excess of $1 billion from two California issuers. The state yesterday issued $3.5 billion of refunding economic recovery bonds, priced by Barclays Capital, following Wednesday’s $1.3 billion Citi-priced Bay Area Toll Authority offering of taxable Build America Bonds.
The Bond Buyer 20-bond index of 20-year general obligation bond yields rose eight basis points this week to 4.39%, which is the highest level for the index since Aug. 27, when it was 4.53%.
The 11-bond index of higher-grade 20-year GO yields increased seven basis points this week to 4.11%. This is the index’s highest level since Sept. 3, when it was also 4.11%.
The revenue bond index, which measures 30-year revenue bond yields, climbed eight basis points this week to 4.95%, which is the highest the index has been since Sept. 17, when it was 4.98%.
The muni yields rose as Treasuries also climbed. The 10-year Treasury note rose nine basis points this week to 3.51%, which is the highest level since Aug. 13, when it was 3.60%.
The 30-year Treasury bond jumped 11 basis points this week to 4.35%. This is the highest the yield has been since Aug. 13, when it was 4.42%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose one basis point this week to 0.55%, but it remained below its 0.57% level from two weeks ago.
The weekly average yield to maturity on The Bond Buyer’s 40-bond municipal bond index, which is based on 40 long-term municipal bond prices, finished at 5.21%, up six basis points from last week’s 5.15%.
