Muni Prices End Lower As Yields Rise 5 bps

Prices of top-rated municipal bonds finished weaker on Wednesday, according to traders, with yields on some maturities rising by as much as five basis points.

There were no major deals on tap but traders were eyeing Puerto Rico developments -- and the clock, as the countdown toward the long holiday weekend began to tick.

 

Secondary Trading

The yield on the 10-year benchmark muni general obligation rose four basis points to 2.32% from 2.28% on Tuesday, while the yield on the 30-year GO was up five basis points to 3.33% from 3.28% according to the final read of Municipal Market Data's triple-A scale.

Treasury prices were lower on Wednesday with the yield on the two-year Treasury note rising to 0.68% from 0.64% on Tuesday, while the 10-year yield rose to 2.43% from 2.32% and the 30-year yield increased to 3.20% from 3.09%.

The 10-year muni to Treasury ratio was calculated on Wednesday at 96.0% versus 97.6% on Tuesday, while the 30-year muni to Treasury ratio stood at 104.3% compared to 105.6%, according to MMD.

 

Puerto Rico GOs Trading Higher

Prices of Puerto Rico debt on Wednesday began to firm after two days of downward movement. Puerto Rico bonds began their descent on Monday after a published report quoted Gov. Alejandro García Padilla as saying the commonwealth couldn't pay its $72 billion in debt.

The Puerto Rico commonwealth Series 2014A general obligation 8s of 2035 on Wednesday were trading as low as 68.25 cents on the dollar, a high yield of 12.301%, according to the Municipal Securities Rulemaking Board's EMMA website. There were 30 trades totaling $41.89 million.

This contrasts to trading on Tuesday, when the commonwealth GO traded as low as 64 cents on the dollar, a high yield of 13.13%, according to EMMA. There were 110 trades totaling $223 million. On Monday, the GOs traded as low as 68.30 cents on the dollar, according to EMMA, a high yield of 12.291%. There were 93 trades totaling $141 million. On Friday, the GOs traded as low as 76.75, according to EMMA, a high yield of 10.874%. There were 19 trades totaling $22 million.

Separately on Wednesday, the commonwealth Series 2012A GO public improvement 5s of 2041 also rose from Tuesday and were trading as low as 57.25 cents on the dollar, according to EMMA, a high yield of 9.439%. There were 63 trades totaling $39.57 million.

On Tuesday, the 5s of 2041 were trading as low as 51.625 cents, a high yield of 10.434%, and was the most active issue of the day, according to EMMA. There were 125 trades totaling $44 million. On Monday, the bonds traded at a low price of 51.716, a high yield of 10.416%, according to EMMA, while the bonds traded on Monday at a low price 63.033, a high yield of 8.571%. On Friday, the bonds traded as low as 63.033, a high yield of 8.571%.

Primary Market

There were no major negotiated deals on the calendar for Wednesday. And there were only a handful of competitive bond sales slated, none over $10 million.

Tax-Exempt Money Market Funds Post Outflows

Tax-exempt money market funds experienced outflows of $2.16 billion, bringing total net assets to $241.71 billion in the period ended June 29, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $1.24 billion to $243.88 billion in the previous week.

The average, seven-day simple yield for the 390 weekly reporting tax-exempt funds remained at 0.01% for a 113th straight week.

The total net assets of the 986 weekly reporting taxable money funds rose $5.23 billion to $2.395 trillion in the period ended June 30, after experiencing an outflow of $14.99 billion to $2.370 trillion in the prior week.

The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 24th consecutive week.

Overall, the combined total net assets of the 1,376 weekly reporting money funds increased $3.06 billion to $2.637 trillion in the period ended June 30, which followed an inflow of $18.61 billion to $2.634 trillion the week before

MSRB Previous Session's Activity

The Municipal Securities Rulemaking Board reported 41,055 trades on Tuesday on volume of $8.875 billion.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $2.25 billion to $5.58 billion on Wednesday. The total is comprised of $2.52 billion competitive sales and $3.06 billion of negotiated deals.

 

 

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