All of The Bond Buyer’s weekly yield indexes rose this week, as bond prices declined consistently throughout the period.

“The market continues to act a bit nervously about how low yields are,” said Matt Fabian, managing director at Municipal Market Advisors. “There has been some difficulty in bringing bonds in the primary market at the market’s aggressive levels. There has been a fair amount of gains taking in the secondary market and that has been widening out spreads. At some point, the weakness in the primary could translate into weakness in the secondary. It looks like there is some momentum for a correction in the near term. So unless something happens to justify or reinforce current levels, the more likely scenario is a modest correction in yields.”

“The correction might not be very much,” Fabian said. “There is still cash in the market waiting to be invested. There is still tremendous interest in owning bonds. It may not need to be very much. It is important to know that the selling pressure has not come from any kind of fear-based selling. It has appeared to be more opportunistic gains taking. Generally, institutional investors in munis have limited opportunity to take gains. So when a situation like now presents itself, with a lot of investors with cash, a limited new-issue calendar, and very low yields, it’s a good opportunity to realize some gains.”

Leading the new-issue market this week, Morgan Stanley priced $900 million of debt for New York City.

The Bond Buyer 20-bond index of 20-year general obligation bond yields rose nine basis points this week to 4.37%. This is the highest level for the index since April 29, when it was also 4.37%.

The 11-bond index of higher-grade 20-year GO yields gained eight basis points this week to 4.09%, which is its highest level since April 22, when it was 4.10%.

The revenue bond index, which measures 30-year revenue bond yields, increased one basis point this week to 4.82%, but it remained below its 4.84% level from two weeks ago.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose five basis points this week to 0.52%, which is its highest level since May 12, when it was also 0.52%.

The yield on the 10-year Treasury note declined seven basis points this week to 3.32%, which is its lowest level since May 20, when it was 3.26%.

The yield on the 30-year Treasury bond declined five basis points this week to 4.24%, which is its lowest level since May 20, when it was 4.14%.

The weekly average yield to maturity on The Bond Buyer’s 40-bond municipal bond index, which is based on 40 long-term municipal bond prices increased one basis point this week to 5.10%. This is the highest weekly average for the yield to maturity since the week ended May 13, when it was also 5.10%.

Priti Patnaik contributed to this column.

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