The municipal bond market was winding down on Thursday, with the last larger sales of the week slated to come market as traders were preparing for the upcoming Memorial Day holiday weekend.
Secondary Market
U.S. Treasuries were stronger in early Thursday trading. The yield on the two-year Treasury dropped to 0.89% from 0.91% on Wednesday, while the 10-year Treasury yield declined to 1.85% from 1.86% and the yield on the 30-year Treasury bond decreased to 2.65% from 2.67%.
Top-quality municipal bonds finished steady to weaker on Wednesday. The yield on 10-year benchmark muni general obligation was one basis point higher to 1.66% from 1.65% on Tuesday while the 30-year muni yield was steady from 2.45%, according to the final read of Municipal Market Data's triple-A scale.
Long-term muni yields have been on a bumpy 10-year downward trend overall. In May of 2006, the yield on the 30-year muni was calculated at 4.58%. On May 17, the 30-year muni yield stood at its all-time low of 2.39%, down from the previous lows set back in 2012.
The 10-year muni to Treasury ratio was calculated at 88.8% on Wednesday compared to 88.8% on Tuesday, while the 30-year muni to Treasury ratio stood at 91.8% versus 92.7%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,604 trades on Wednesday on volume of $13.33 billion.
Primary Market
Bank of America Merrill Lynch is set to price the Los Angeles Department of Water and Power's $265.17 million of Series 2016B water system revenue bonds for institutions after holding a one-day retail order period.
The issue was priced for retail as 5s to yield from 1.09% in 2021 to 2.45% in 2038; 2.51% in 2042 and 2.55% in 2046.
The deal is rated Aa2 by Moody's Investors Service, AA-plus by S&P Global Ratings and AA by Fitch Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $4.05 billion to $8.88 billion on Thursday. The total is comprised of $6.48 billion of competitive sales and $2.40 billion of negotiated deals.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $987.8 million, bringing total net assets to $211.40 billion in the week ended May 23, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.55 billion to $212.39 billion in the previous week.
The average, seven-day simple yield for the 296 weekly reporting tax-exempt funds was unchanged at 0.06%.
The total net assets of the 893 weekly reporting taxable money funds increased $25.30 billion to $2.503 trillion in the week ended May 24, after an outflow of $16.29 billion to $2.477 trillion the week before.
The average, seven-day simple yield for the taxable money funds was 0.10%, down from 0.11% in the prior week.
Overall, the combined total net assets of the 1,189 weekly reporting money funds increased $24.31 billion to $2.714 trillion in the period ended May 24, which followed an outflow of $18.84 billion to $2.690 trillion.