Yields Increase Amid Softness Inside 20 Years

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Nearly all The Bond Buyer's weekly yield indexes rose this week as weakness inside of 20 years on the municipal yield curve persisted through Wednesday, before subsiding yesterday.

Michael Pietronico, chief executive officer of Miller Tabak Asset Management said yesterday's firmness was "probably an indication that the Street is getting some progress on getting their inventory down."

Softness in the market this week has been mostly situated in the short and intermediate parts of the curve, with the long end remaining mostly flat. But Pietronico said there is "debate as to whether the long end outperformed as much as is being said."

The weakness was "easier to spot in the belly of the curve, because of more residual balances from prior deals that have been building up," he said. "The long end has just not been tested. There hasn't been too much supply."

The Bond Buyer 20-bond index of 20-year general obligation bond yields rose one basis point to 4.45%. This is the highest the index has been since Aug. 27, 2009, when it was 4.53%.

The 11-bond index of higher-grade 20-year GO yields also gained one basis point this week, to 4.16%. It is now at its highest level since Aug. 27, 2009, when it was 4.27%.

The revenue bond index, which measures 30-year revenue bond yields, rose two basis points this week to 4.96%. It is at its highest level since Feb. 18, when it was 4.97%.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose 10 basis points this week to 0.53%. This is the highest the index has been since Nov. 24, 2009, when it was 0.56%.

The yield on the 10-year Treasury note increased five basis points this week to 3.89%, but remained below its 3.90% level from two weeks ago.

The yield on the 30-year Treasury bond rose three basis points this week, to 4.75%. But it is still below its 4.78% 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 5.22%, down five basis points from last week's 5.27%.

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