The Bond Buyer’s weekly yield indexes declined during this holiday-shortened week, buoyed mostly by a Wednesday rally of three to five basis points.
“It was combination of reinvestments, cash being put to work, low dealer inventory, and a light calendar from a shortened Fourth of July week,” Daniel Berger, senior market strategist at Thomson Reuters, said of Wednesday’s firmness.
“This rally was really evident in the five- and 10-year range,” he said. “And the [Municipal Market Data] ratio to Treasuries really diminished quite a bit, meaning that there was substantial muni outperformance.”
He said trading activity was dull Thursday as things slowed down quite a bit, Berger said.
“The market has been quite volatile,” he said. “We have to see what the market will be like next week. There could be deals popping up, but it is a relatively light calendar.”
Berger noted that Wednesday’s $105.7 million competitive sale of general obligation debt for gilt-edged Missouri was a catalyst for broad and aggressive high-grade trading in the short and intermediate range.
JPMorgan won the bonds.
“Part of this could have been scarcity in the name, but it got a strong reception,” he said.
The Bond Buyer 20-bond index of 20-year GO yields declined two basis points this week to 4.36%, the index’s lowest level since 4.28% on June 3.
The 11-bond index of higher-grade 20-year GO yields also declined two basis points this week to 4.08%, its lowest level since 4.01% on June 3.
The revenue bond index, which measures 30-year revenue bond yields, dropped five basis point this week to 4.79%. This was its lowest level since 4.69% on Oct. 8, 2009.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, declined five basis points this week to 0.59%, but remained above its 0.56% level from two weeks ago.
The yield on the 10-year Treasury note rose eight basis points this week to 3.02%, but remained below its 3.13% level from two weeks ago.
The yield on the 30-year Treasury bond jumped 12 basis points this week to 4.00%, but is still below its 4.09% level from two weeks ago.
The average weekly yield to maturity of The Bond Buyer municipal bond index, which is based on 40 long-term bond prices, declined three basis points this week to 5.14%.
It is the lowest weekly average for the yield to maturity since the week that ended June 10, when it was 5.10%.
Priti Patnaik contributed to this column.