Top rated muni yields dropped five basis points for the second day in a row, as volume and market participants were scarce.

Secondary market
The yield on the 10-year benchmark muni general obligation was five basis points lower Wednesday to 2.02% from 2.07% on Tuesday, while the 30-year GO decreased five basis points to 2.58% from 2.63%, according to a final read of MMD’s triple-A scale.

U.S. Treasuries were mostly stronger at Wednesday’s close. The yield on the two-year Treasury was steady at 1.90%, the 10-year Treasury yield decreased to 2.41% from 2.46% and the yield on the 30-year Treasury fell to 2.75% from 2.81%.

The 10-year muni-to-Treasury ratio was calculated at 83.7% compared with 83.8% on Tuesday, while the 30-year muni-to-Treasury ratio stood at 94.0% versus 93.3%, according to MMD.The MBIS municipal non-callable 5% GO benchmark scale was stronger in trading through the market close on Wednesday.

The 10-year muni benchmark yield dipped to 2.310% from Tuesday's final read of 2.343%, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield dropped to 2.788% from 2.819%.

The MBIS benchmark index, which is comprised of investment-grade municipal securities, is updated hourly on the Bond Buyer Data Workstation.

Primary market
The primary market will continue to go through the motions with little action and even fewer participants around until early January.

General obligation bonds took a hit from recent bankruptcies and are no longer considered bulletproof. So some investors now prefer buying revenue bonds.

“The majority of our funds are revenue bonds, but I think GOs have been mispriced in the muni market for a long time," said one portfolio manager. "You get a wider, more secure value with revenue bonds. In the stressed GOs you have seen some second guessing, but the stronger-credit names you don't second guess."

As of Dec. 26, issuers sold $159.93 billion of GO bonds year-to-date, down from $178.81 billion in 2016. Issuers brought $249.39 billion of revenue bonds, compared with $265.99 billion last year. Taxable issuance this year has risen to $33.99 billion from $29.92 billion in 2016.

Bond Buyer 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $28.7 million to $3.15 billion on Thursday. The total is comprised of $1.28 billion of competitive sales and $1.87 billion of negotiated deals.


Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.