Market Post: Munis, Treasuries Higher As Stocks Tumble

The risk-off trade, brought on by economic woes in Europe, buoyed fixed income assets and pushed munis and Treasuries higher. Yields hit record lows in the Treasury market and munis were on pace to do the same Monday morning.

Munis were much stronger Monday morning, according to the Municipal Market Data scale. Yields inside five years were steady while six- to nine-year yields dropped between one and four basis points. Outside 10 years, yields plunged three to five basis points.

On Friday, the two-year closed at 0.31% for the fifth consecutive trading session. The 10-year yield finished at 1.70%, closing three basis points above its record low of 1.67% set Jan. 18. The 30-year yield finished at 2.86%, a record low. The previous record was 2.90% set Thursday.

Friday marked the 20th consecutive trading session where munis have traded steady or firmer. Since this most recent rally began on June 22, yields on the 10-year have fallen 16 basis points while the 30-year yield has plunged 30 basis points.

Munis followed Treasuries higher on European woes. The benchmark 10-year yield dropped three basis points to 1.43% while the 30-year yield plunged five basis points to 2.50%. The two-year was steady at 0.22%.

In the primary market, $6.25 billion is expected, down slightly from last week's revised $7.91 billion. In the negotiated market, $4.71 billion is expected, down from last week's revised $5.42 billion. On the competitive calendar, $1.54 billion is expected to be auctioned, down from last week's revised $2.49 billion.