The Bond Buyer’s weekly yield indexes were mixed this week, as the short end of the municipal yield curve cheapened, but the long end remained unchanged to slightly firmer.
Matt Fabian, managing director at Municipal Market Advisors, said that the short-end municipal weakness this week was “opened up by weakness in Treasuries.”
“The front of the muni yield curve had been priced very aggressively, while the back end was more concessionary,” Fabian said. “The Treasury weakness gave the curve an opportunity to reconcile its two sides. So the front end cheapened up, while the back end got richer, bringing them both to neutral. There was some mean reversion going on.”
The new-issue calendar was somewhat light this week. Leading the way, North Carolina competitively sold $487.7 million of general obligation public improvement bonds to Citi yesterday.
Also of note, Bank of America Merrill Lynch Tuesday priced $178.3 million of system revenue bonds for the Arizona Board of Regents, including $165.9 million of taxable Build America Bonds, Wells Fargo Securities Tuesday priced $176.6 million of lease revenue bonds for the California State Public Works Board, and Bank of America Merrill Lynch yesterday priced $168.5 million of hospital refunding revenue bonds for Tennessee’s Johnson City Health and Educational Facilities Board.
The Bond Buyer 20-bond index of 20-year general obligation bond yields was unchanged at 4.44% this week. It remains at its highest level since Aug. 27, 2009, when it was 4.53%.
The 11-bond index of higher-grade 20-year GO yields was also unchanged this week, at 4.15%. It is still at its highest level since Aug. 27, 2009, when it was 4.27%.
The revenue bond index, which measures 30-year revenue bond yields, rose one basis point this week to 4.94%. It is at its highest level since Feb. 25, when it was also 4.94%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, declined five basis points this week to 0.43%, but it remained above its 0.40% level from two weeks ago.
The yield on the 10-year Treasury note declined six basis points this week to 3.84%, but it is still above its 3.67% level from two weeks ago.
The yield on the 30-year Treasury bond also dropped six basis points this week, to 4.72%, but remains above its 4.59% level from two weeks ago.
The weekly average yield to maturity on The Bond Buyer’s 40-bond municipal bond index, which is based on 40 long-term municipal bond prices finished at 5.27%, unchanged from last week.