Sturdy demand for tax-exempt paper and falling Treasuries pushed municipal yields in the intermediate and long ends of the curve lower throughout much of the week.

Bond Buyer Indexes

While the 10-year and 30-year triple-A yields paced those for all other muni and Treasury maturities through the week, the 30-year muni yield set record lows on three consecutive sessions.

Muni bond indexes all fell across the board, reflecting lower rates on the week.

The Bond Buyer’s 20-bond index of 20-year general obligation yields declined 10 basis points this week to 3.71%. It is at its lowest level since Feb. 23, when it was 3.69%.

The 11-bond index of higher-grade 20-year GO yields also dropped 10 basis points this week to 3.49%. This is its lowest level since March 1, when it was 3.47%.

The yield on the U.S. Treasury’s 10-year note dropped four basis points this week to 1.89%. It is at its lowest level since Feb. 2, when it was 1.83%.

The yield on the Treasury’s 30-year bond fell six basis points this week to 3.06%, which is its lowest level since Feb. 2, when it was 3.01%.

Several factors pushed yields lower on the week, said Howard Mackey, president of the broker-dealer unit of Rice Financial Products. For starters, a moderate-sized calendar sometimes helps tax-exempt yields. “That, plus we had a weak stock market, and that has tended to increase the whole flight-to-quality mentality,” he said. “And we do get some benefit from that.”

But the muni market was pretty sluggish Thursday, facing the first day of backups since the week started. Still, tax-exempt yields, as they did for the week since last Friday, outperformed those of Treasuries on the day.

Primary deals met hungry investors. Yields on one of the week’s larger deals, $408.5 million of California Health Facilities Financing Authority revenue bonds for Stanford Hospital and Clinics, fell up to nine basis points Wednesday from preliminary pricing. “There is a lot of demand for paper, and there isn’t a whole lot,” Mackey said. “So, if you get new issues, particularly high-grade issues, there tends to be a fair amount of demand.”

Muni ratios to Treasuries at the middle and long ends of the yield curve got richer since last Friday, according to Municipal Market Data numbers.

Over the week, the 10-year ratio fell four percentage points to 93.12% by Thursday’s end, its lowest level since Feb. 21. The 30-year ratio fell two percentage points over the week to 100.98% by Thursday’s close.

Despite a 17-day stagnation at its current level yield of 0.31%, the triple-A two-year, as part of the short end of the yield curve, has seen a lot of demand this week, Mackey added. “I won’t say you can name your price, but we’ve seen some very tight spreads, versus where spreads might come out 10 years and beyond,” he said. “The first few years have shown an extreme amount of demand.”

The revenue bond index, which measures 30-year revenue bond yields, fell four basis points this week to 4.73%. It is at its lowest level since March 1, when it was also 4.73%.

The Bond Buyer’s one-year note index, which is based on one-year GO note yields, declined two basis points this week to 0.25%. This is its lowest level since April 18, when it was 0.23%.

The weekly average yield to maturity of The Bond Buyer municipal bond index, which is based on 40 long-term bond prices, declined five basis points this week to 4.48%. This is the lowest weekly average for the yield to maturity since the index began in July 1984.

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