Bond yields at a glance

MBIS benchmark (~AA)

MBIS AAA

MMD AAA

U.S. Treasuries

10 year

2.614

2.497

2.39

2.77

30 year

3.039

2.940

2.93

3.01

MBIS indices are updated hourly on the Bond Buyer Data Workstation.

Municipal bond yields rose along with Treasuries on Thursday, a day after the Federal Reserve signaled it could raise interest rates at its next meeting in March. The Treasury 10-year rose past 2.75%, its highest level in almost four years, while the 30-year yield moved up above 3%.

The Federal Open Market Committee left interest rates unchanged at the conclusion of its two-day monetary policy meeting on Wednesday. It was Janet Yellen’s last FOMC meeting and the stage is now set for a rate hike next month under her successor Jerome Powell.

Also weighing on bonds was the Treasury announcement that it intends increase the size of its auctions by about $42 billion over the next quarter, reflecting larger sales of two- and three-notes, two-year floating-rate notes and five-, seven-, 10-, and 30-year securities.

Since the beginning of the year, 10-year MBIS benchmark muni yields have risen by about 33 basis points while yields on top-rated 10-year MMD munis have risen by around 41 basis points.

In late trading, the MBIS municipal non-callable 5% GO benchmark scale was weaker while the MBIS AAA scale was mixed.

The 10-year MBIS muni benchmark yield rose to 2.614% on Thursday from the final read of 2.590% on Wednesday, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield gained to 3.039% from 3.028%. On Jan. 2, the 10-year MBIS muni yield stood at 2.280% while the 30-year muni yield was at 2.744%.

The 10-year MBIS muni AAA yield decreased to 2.497% in Thursday trading from the final read of 2.504% on Wednesday, according to Municipal Bond Information Services. The MBIS 30-year AAA muni yield rose to 2.940% from 2.935%.

The MBIS benchmark index is updated hourly on the Bond Buyer Data Workstation.

Turning to top-quality bond reads, munis ended weaker on Thursday, according to Municipal Market Data. The yield on MMD’s 10-year benchmark muni general obligation rose four basis points to 2.39% from 2.35% on Wednesday, while the 30-year GO yield increased two basis points to 2.92% from 2.91%, according to the final read of MMD’s triple-A scale.

On Jan. 2, the 10-year muni yield stood at 1.98% while the 30-year muni yield was put at 2.55%, according to MMD.

U.S. Treasuries were weaker in late trading. The 10-year Treasury yield rose to 2.77% from 2.73% while the yield on the 30-year Treasury increased to 3.01% from 2.95%.

On Thursday, the 10-year muni-to-Treasury ratio was calculated at 86.1% compared with 86.5% on Wednesday, while the 30-year muni-to-Treasury ratio stood at 97.4% versus 96.6%, according to MMD.

Tax-exempt money market funds saw outflows
Tax-exempt money market funds experienced outflows of $285.1 million, bringing total net assets to $137.52 billion in the week ended Jan. 29, according to The Money Fund Report, a service of iMoneyNet.com.

This followed an inflow of $1.68 billion on to $137.80 billion in the previous week.

The average, seven-day simple yield for the 197 weekly reporting tax-exempt funds fell to 0.69% from 0.75% the previous week.

The total net assets of the 828 weekly reporting taxable money funds decreased $25.32 billion to $2.638 trillion in the week ended Jan. 30, after an inflow of $24.17 billion to $2.663 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 0.97% from 0.64% from the prior week.

Overall, the combined total net assets of the 955 weekly reporting money funds decreased $25.61 billion to $2.775 trillion in the week ended Jan. 30, after inflows of $25.85 billion to $2.801 trillion in the prior week.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 47,799 trades on Wednesday on volume of $13.37 billion.

California, New York and Texas were the three states with the most trades on Tuesday, with the Golden State taking 14.196% of the market, the Empire State taking 10.178% and the Lone Star State taking 9.945%.

Primary market
In the short-term competitive sector, Westchester County, N.Y., sold $150 million of tax anticipation notes for 2018 taxes.

Bank of America Merrill Lynch won the notes with a bid of 2% plus $389,250 premium, an effective rate of 1.158378%.

The notes, due May 29, were priced as 2s to yield 1.10%

The deal is unrated.

Treasury announces bill auctions
The Treasury Department announced it will auction $48 billion of 91-day bills on Feb. 5; $42 billion of 182-day bills on Feb. 5; and $30 billion of 70-day cash management bills on Feb. 6

--Gary Siegel contributed to this report.

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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Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.
Aaron Weitzman

Aaron Weitzman

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