Municipal bond yields fell for the ninth straight day on Wednesday, according to Municipal Market Advisors data.
The two-year fell by one basis point to 0.38%, the 10-year by four basis points to 2.31% and the 30-year by two basis points to 3.67% on Wednesday, according to MMA data.
Yields began falling after the employment situation report announced on April 4 that the unemployment rate remained at 6.7% in March.
From April 3, the day before the report was released, to market close on Wednesday yields have dropped by three basis points for two-year maturities, 24 basis points for 10-years, and 32 basis points for the 30-year, according to MMA data.
Since yields have fallen more significantly on the long-end of the curve, investors have begun looking at short-term bonds.
"You are not getting as much return going out long, so people are reacting to that," a trader in New York said.
A trader in Virginia said he has observed investors buying in the front end of the curve.
"People are buying shorter maturities," he said. "The short-end of the curve has calmed down a bit in the last week or so, it has rallied pretty significantly from the high it reached after Janet Yellen's March 19 speech."
A trader in North Carolina agreed that there is now definitely a lot of strong interest in the front-end of the curve.
"Following the upward yield adjustments, shorter maturities now offer better value than six weeks ago," John Dillon, chief municipal strategist at Morgan Stanley, said in a video released on Tuesday.
Traders said the competitive North Carolina general obligation bonds that came to market Wednesday were priced aggressively.
Morgan Stanley won the bid for the $321.1 million high-grade deal that's the largest competitive issuance this week.
"It's aggressive," the trader in Virginia said. "These decent sized AAA high-grade deals tend to catch a pretty high bid. The North Carolina deal caught a phenomenal bid."
The bonds were rated Aaa by Moody's Investors Service and AAA by both Standard & Poor's and Fitch Ratings. Yields ranged from 0.13% with a 5% coupon maturing in 2015 to 2.39% with a 5% coupon in 2025.
"I think North Carolina came in a bit on the aggressive side," the trader in North Carolina said.
The North Carolina trader said that the North Carolina deal came to market at such strong levels that he has seen some follow-up trading.
"There's been some follow-up trading in the 10-year," the trader in North Carolina said. "I did hear that 10-year maturities did go away to accounts."
The trader in Virginia said this week's low issuance contributed to the bonds' high pricing.
Total potential volume scheduled for this week is $2.55 billion, according to data provided by Ipreo and The Bond Buyer.
"$2.5 billion is nothing, it's just been terrible," he said. "That's why there competitive deals can afford such aggressive scales."
A trader in Chicago said that most deals coming this week are being priced-up because issuance dropped from last week. Last week issuance totaled $4.4 billion according to Ipreo and The Bond Buyer.
"All the deals that have come to market are lower in yield than you would have seen a week ago," he said.
The trader in Virginia said that low issuance this week has made it difficult to find yield.
"We are looking for ways to put a little bit of yield on the portfolio, but deals this week are ten times over-subscribed so we have been dropping out of the order period because spreads will tighten," the trader said. "It's a tough pill to swallow, trying to add spread and then when you think you have it, it tightens."
He said that right now he is looking at university and healthcare bonds where he can get a little bit of spread to put some money to work.
"For the most part we are focusing in the secondary on quality yield paper which is becoming harder and harder to find," the trader in New York said. "There's a variety of names we are looking at, but we are focusing on healthcare."
In the negotiated market, Raymond James & Associates Inc. will issue $197.5 million of revenue and refunding bonds for the New Jersey Educational Facilities Authority Wednesday. The bonds mature serially from 2015 through 2033 and are rated A1 by Moody's Investor Services, A by Standard & Poor's and A-plus by Fitch Ratings.
Yields ranged from 0.2% on the 4% coupon for 2016 maturities to 3.89% for the 5% coupon in 2033. The bonds are callable at par in 2024.
Muni yields fell by two basis points for bonds maturing in two-to seven-years, and for 11-year maturities. They declined by three basis points for bonds maturing in eight to 10 years, and by one basis point for 12-year maturities and for maturities from 14 to 30 years, according to MMD data.
Treasuries weakened Wednesday, with the 30-year yields falling two basis points to 3.45% and the 10-year benchmark slipping one basis point to 2.64%.
The two-year notes were unchanged at 0.38%.
