The Bond Buyer’s weekly yield indexes rose this week, as the municipal market grew weaker in most of the week’s sessions.
“It was just selling pressure in general, and very lackluster buying,” said George Strickland, managing director and portfolio manager at Thornburg Investment Management. “There’s a lot of people that are sort of sitting on their hands, watching the bond insurers go down. There’s selling pressure coming in from leveraged buyers, arbitrage, and hedge funds, and signs of more of that to come. So it’s hard to get real motivated about buying bonds in this market.”
The municipal market was unchanged Friday after an early sell-off was negated by a later rally. Munis were then unchanged to slightly weaker Monday, starting the new week quietly after last week’s tremendous volatility, while underwriters postponed this week’s San Francisco International Airport deal.
The San Francisco Airport Commission opted to postpone its upcoming deal sale to market conditions. The commission’s variable-rate demand obligation deal is now slated for March 26, and the fixed rate will be day-to-day, officials say.
Tax-exempts were weaker by three to five basis points Tuesday, following Treasuries, which dipped after the durable goods report came in much stronger than expected.
The tax-exempt market was again weaker by about three to five basis points Wednesday as the Federal Reserve opted to cut the federal funds rate target 50 basis points to 3%. The Fed also cut the rate 75 basis points just over a week ago on Jan. 22, to 3.50% from 4.25%, and then cut again yesterday to 3% from 3.50%.
Yesterday, the municipal market was firmer by about one to three basis points, following Treasuries.
The Bond Buyer 20-bond index of GO yields rose 10 basis points this week to 4.39%, its highest level since Dec. 27, 2007, when it was 4.44%.
The 11-bond index rose 11 basis points to 4.31%, its highest level since Dec. 27, 2007, when it was 4.37%.
The revenue bond index rose five basis points to 4.76%, the highest level since Dec. 27, 2007, when it was 4.80%.
The 10-year Treasury note fell one basis point to 3.64%, its lowest level since July 2, 2003, when it was 3.54%.
The 30-year Treasury bond fell one basis point to 4.35%, but remained above its 17-month low of 4.34% from two weeks ago.
The Bond Buyer one-year note index fell 19 basis points to 1.89%, which is the lowest since Nov. 3, 2004, when it was 1.86%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 4.86%, up 10 basis points from last week’s 4.76%.