Yields Mostly Down as Munis Keep Firming

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The Bond Buyer’s weekly yield indexes mostly declined this week as the municipal market continued to edge slightly firmer throughout the period.

Michael Pietronico, chief executive at Miller Tabak Asset Management, said that while bond prices “continued to firm,” there is “not an imminent sign of a substantial sell-off in the next week or so, because there just seems to be too much cash.”

Pietronico also noted that headline risk in the municipal market is “still acting as a headwind to a lot of folks considering investing in munis.”

“But one cannot deny the price action in tax-free bonds, and that has been positive now for the last 12 months,” he said. “So it gets harder to make the world-is-coming-to-an-end scenario, when you see price action like you do in tax-frees.”

Leading the new-issue market this week, Illinois and the Los Angeles Community College District each sold $900 million taxable Build America Bond deals priced by Citi.

The Bond Buyer 20-bond index of 20-year GO yields rose one basis point this week to 4.37%, but remained below its 4.38% level from two weeks ago.

The 11-bond index of higher-grade 20-year GO yields also rose one basis point this week, to 4.09%, but is still below its 4.10% level from two weeks ago.

The revenue bond index, which measures 30-year revenue bond yields, dropped two basis points this week to 4.77%. This was its lowest level 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, declined eight basis points this week to 0.51%, which is its lowest level since June 2, when it was 0.47%.

The yield on the 10-year Treasury note fell four basis points this week to 2.98%, but remained above its 2.94% level from two weeks ago.

 The yield on the 30-year Treasury bond dropped three basis points this week to 3.97%, but it is still higher than its 3.88% 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 one basis point this week to 5.13%. It is the lowest weekly average for the yield to maturity since the week ended June 10, when it was 5.10%.

Priti Patnaik contributed to this column.

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