The Bond Buyer's weekly yield indexes were mixed this week, as positive sessions were slightly outweighed by negative ones, particularly away from the short end of the municipal yield curve.
"The positive momentum has diminished," said Matt Fabian, managing director at Municipal Market Advisors. "I think we're still probably biased positively, but the momentum has diminished quite a bit. We're probably more now stable to positive, as opposed to generally positive. Now, with sort of a fall in high-grade yields, you would think that you'd see more credit and term spreads developing, as those bonds cheapen up back through retail support levels."
The municipal market was firmer by five to seven basis points Friday as the strong demand for tax-exempt securities seen last week continued. By Monday, however, the demand had weakened some, as munis were unchanged to slightly firmer ahead of a full slate of new-issue supply set to hit the market this week.
Tax-exempts then weakened Tuesday by five to seven basis points, following the Treasury market, which sold off after the Federal Reserve announced a plan to loan dealers up to $200 billion in Treasury securities to help ease tightness in the credit market.
Municipals were then mixed Wednesday, as firmness on the short end of the curve was balanced by weakness on the longer end.
Yesterday, the muni market was unchanged to slightly weaker, following Treasuries, as two $1 billion transactions were priced in the primary market. Lehman Brothers priced $1.1 billion of general revenue bonds for New York's Triborough Bridge and Tunnel Authority and Bear, Stearns & Co. priced $1 billion of power supply revenue bonds for the California Department of Water Resources.
The Bond Buyer 20-bond index of GO yields rose two basis points this week to 4.94%, but remained below its level from two weeks ago, when it was 5.11%.
The 11-bond index also rose two basis points, to 4.85%, but remained below its 5.02% level from two weeks ago.
The revenue bond index rose four basis points to 5.15%, but remained below its 5.22% level from two weeks ago.
The 10-year Treasury note fell seven basis points to 3.54%, which is the lowest it has been since July 2, 2003, when it was also 3.54%.
The 30-year Treasury bond fell one basis point to 4.57%, but remained above its 4.53% level from two weeks ago.
The Bond Buyer one-year note index fell 18 basis points to 2.07%, its lowest level in a month, since it was 1.02% on Feb. 13.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.14%, down nine basis points from last week's 5.23%.
