The municipal bond market is taking the day to digest and reflect on both the week's new issue supply and the timing and breadth of the Federal Reserve's first move.
The Federal Open Market Committee's statement Wednesday on monetary policy dropped the word "patient," hinting that an interest rate hike could come as early as June. However, the Fed also indicated it is still in no rush to raise rates and is still actually being rather patient while waiting for more economic data to show an improving economy.
Secondary Market
Treasury prices were mixed on Thursday. The yield on the two-year Treasury note rose to 0.59% from 0.56% on Wednesday, while the 10-year yield decreased to 1.94% from 1.97% and the 30-year yield slipped to 2.53% from 2.54%.
Prices of top-quality municipal bonds finished markedly higher on Wednesday, traders said, after the FOMC statement. The yield on the 10-year benchmark muni general obligation fell six basis points to 2.03% from 2.09% on Tuesday, while the yield on 30-year GO declined five basis points to 2.85% from 2.90%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 106.0% on Wednesday versus 101.7% on Tuesday, while the 30-year muni to Treasury ratio stood at 113.7% compared to 110.9%.
Primary Market
J.P. Morgan Securities has received the official award on the Albuquerque Bernalillo County Water Utility Authority, N.M.'s $211.94 million of senior lien water and sewer system refunding and improvement revenue bonds. The issue was priced to yield from 0.74% with a 4% coupon in 2017 to 3.37% with a 4% coupon in 2033. The issue is rated Aa2 by Moody's Investors Service, AA-plus by Standard & Poor's and AA by Fitch Ratings.
On Wednesday, the largest competitive bond sale of the week was sold - the Omaha Public School District No. 001, Neb.'s $141 million of Series 2015 GOs. The deal was won by JPMorgan with a true interest cost of 3.4189% and priced to yield from 2.18% with a 5% coupon in 2024 to 3.35% with a 4% coupon in 2040. The bonds were rated Aa1 by Moody's and triple-A by S&P.
Tax-Exempt Money Market Funds See Outflow
Tax-exempt money market funds fell $443.7 million, bringing total net assets to $259.99 billion in the period ended March 16, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $1.09 billion to $260.43 billion in the previous week.
The average, seven-day simple yield for the 396 weekly reporting tax-exempt funds remained at 0.01% for a 98th straight week.
The total net assets of the 991 weekly reporting taxable money funds fell $19.06 billion to $2.428 trillion in the period ended March 17, after experiencing an inflow of $10.64 billion to $2.447 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the ninth consecutive week.
Overall, the combined total net assets of the 1,387 weekly reporting money funds decreased $19.50 billion to $2.688 trillion in the period ended March 10, which followed an inflow of $11.73 billion to $2.708 trillion in the prior period.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $720.4 million to $7.851 billion on Thursday. The total is comprised of $3.677 billion competitive sales and $4.174 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,883 trades on Wednesday on volume of $13.481 billion.
Most active on Wednesday, based on the number of trades, was the Kentucky Municipal Power Agency's Series 2015A power system revenue refunding bonds (Prairie State Project), 4s of 2039, which traded 279 times at an average price of 98.945 with an average yield of 4.065%; (initial offering price of 97.858 and an initial offering yield of yield of 4.14%).
