Yields Trend Down, Lagging Treasury Losses

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The Bond Buyer’s weekly yield indexes were narrowly mixed this week, lagging Treasury market losses.

Michael Pietronico, chief executive officer at Miller Tabak Asset Management, said the “factors that seemed to be most overriding to the markets this week are the low supply and the perception that risk is moving higher in the market.”

“I would not say any one deal influenced the market, but it seems the market is trying to find the balance between demand and supply,” Pietronico said. “Yields are down, right now probably retail is less interested, but nonetheless there is a fair amount of cash as we move into a stronger technical part of the year.”

“The muni market is slowly lagging the Treasury market in both directions,” he said. “It looks like a low supply, low liquidity type of affair, as more and more investors take their vacations and people move to the sidelines. There’s somewhat of a positive backdrop because of low supply, but the liquidity should be challenged also.”

The Bond Buyer 20-bond index of 20-year general obligation bond yields rose one basis point this week to 4.28%, below its 4.32% level from two weeks ago.

The 11-bond index of higher-grade 20-year GO yields was unchanged this week at 4.00%.

The revenue bond index, which measures 30-year revenue bond yields, declined two basis points this week to 4.84%. That is the lowest the index has been since Oct. 8, 2009, when it was 4.69%.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose two basis points this week to 0.51%, but remained below its 0.52% level from two weeks ago.

The yield on the 10-year Treasury note gained nine basis points to 3.35%, but it is still below its 3.55% level from two weeks ago.

The yield on the 30-year Treasury bond increased 11 basis points this week to 4.25%, but it remains below its 4.45% 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 5.06%, down three basis points from last week.

Priti Patnaik contributed to this column.

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