Yields See Slippage in Up and Down Week

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Most of The Bond Buyer’s weekly yield indexes declined slightly, as the longer end of the curve ended the week flat to slightly firmer while the short end lost ground.

“It’s been an up and down week,” said Fred Yosca, manager of underwriting and trading at BNY Mellon.

“There’s been some slippage, more in the front end than anywhere else,” he said, adding: “Whatever the intermediate and longer end gave up, they gained back.”

Yosca attributed long-end yields rising less than those on the shorter end to “pure technicals,” noting that the crossover ratio to Treasuries has slipped.

“At the end of August, munis were about 104% of 30-year Treasuries. Now we’ve slipped to around 96%,” he said. “It’s certainly not the attractiveness of long munis that’s driving the relative cheapness. It has to be an imbalance in supply and demand because of lack of supply.”

Yosca also noted that the curve got so steep with the rally in August that “something had to give,” and it was the short end of the curve, which had seen the bulk of the gains.

The Bond Buyer 20-bond index of 20-year general obligation bond yields declined three basis points this week to 3.89%, but remained above the 3.86% level recorded two weeks ago.

The 11-bond index of ­higher-grade 20-year GO yields fell four basis points this week to 3.63%, but was still higher than the 3.60% level from two weeks

ago.

The revenue bond index, which measures 30-year revenue bond yields, declined two basis points this week to 4.63%. That matches the 4.63% level from two weeks ago.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose two basis points this week to 0.46%, but remained below its 0.51% level from two weeks ago.

The yield on the 10-year Treasury note was unchanged this week at 2.76%.

The yield on the 30-year Treasury bond gained nine basis points this week to 3.93%, which is its highest level since Aug. 12, when it was 3.95%.

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 4.90%, unchanged from last week.

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