All of The Bond Buyer's weekly yield indexes declined this week, as tax-exempt yields dropped in nearly all the week's sessions.

"Munis have been rallying all week, along with the taxable markets," said Evan Rourke, portfolio manager at MD Sass. "Pretty much across the board, we've rallied in sympathy with Treasuries."

"Volume all week was somewhat light," he said. "There was a relatively light calendar, and I think it's just been a lot of selling into interest, into inquiry. This may unfortunately be the way of the future, being driven by retail inquiry or trust business versus any kind of real institutional or speculative institutional flow."

"It's definitely feeling like the dog days of August," Rourke added. "There's been some activity every day, but it feels very muted, relative to some other weeks we've had where it's been real busy."

The municipal market was firmer by about two basis points Friday, with much of the firmness seen on the long end. Then, Monday, munis were unchanged to slightly weaker in light trading.

However, on Tuesday, tax-exempts were firmer by as much as three to five basis points, following Treasuries, while in the new-issue market, the District of Columbia sold $327 million of general obligation bonds, which was priced by Merrill Lynch & Co. Also, Merrill Lynch priced $250 million of home mortgage revenue bonds for the California Housing Finance Agency.

Munis were again slightly firmer Wednesday, mostly on the short end, despite some Treasury market losses. Morgan Stanley also priced $268.5 million of health system bonds for New York City. Also, Citi priced $233.1 million of tobacco settlement asset-backed bonds for New York's Suffolk Tobacco Asset Securitization Corp. And the New York Local Government AssistanceCorp. competitively sold $207.6 million of refunding bonds to Lehman Brothers.

Additionally, yesterday, the municipal market was largely unchanged, but with a slightly firmer tone. Also, in the new-issue market, Citi priced $395.3 million of consolidated fifth general resolution revenue bonds for the Dormitory Authority of the State of New York. Citi also priced $292.9 million of health system revenue refunding bonds for the Indiana Finance Authority.

The Bond Buyer 20-bond index of GO yields and 11-bond index both fell eight basis points this week, to 4.67% and 4.58%, respectively. These are their lowest levels since July 17, when they were 4.65% and 4.56%, respectively.

The revenue bond index fell six basis points to 5.17%, which is the lowest level since July 17, when it was 5.11%.

The 10-year Treasury note fell two basis points to 3.89%, which is the lowest since July 10, when it was 3.81%.

The 30-year Treasury bond yield fell four basis points to 4.51%, which is the lowest since July 10, when it was 4.42%.

The Bond Buyer one-year note index fell four basis points to 1.59%, which matches its level from two weeks ago.

The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.31%, down four basis points from last week's 5.35%.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.