Nearly all The Bond Buyer's weekly yield indexes increased this week, as yesterday's weakness provided some direction to what had otherwise been a sideways market for most of the week.
"The market definitely has an unusual feel to it," said Evan Rourke, portfolio manager at MD Sass. "But the real notable thing to me is just the absence of a strong institutional bid side."
"Dealers aren't really supporting the market at the moment," he said. "Their balance sheets are constrained, as some of them are coming into quarter-end, but there's nobody else in there at current ratios or current yields to step up and say, 'OK, these are attractive, we'll just take them down, and we'll distribute them later.' It's that lack of supportive bid that's really notable. And it probably will make spreads get even wider, and it may make munis get cheaper."
The municipal market was mostly unchanged with a slightly firmer tone Thursday, ahead of an early market close and the Good Friday holiday. The muni market was slightly weaker Monday, following Treasuries, as market participants eased themselves back to work after the long weekend. The Treasury market showed losses as stocks rose on news that JPMorgan Chase & Co. was raising its purchase price on Bear, Stearns & Co. to $10 a share from $2 a share.
Tax-exempts were unchanged Tuesday, as JPMorgan priced $600 million of federal highway revenue bonds in two series for the Georgia State Road and Tollway Authority. In economic data released Tuesday, the consumer confidence index plunged in March, dropping to 64.5 from an upwardly revised 76.4 last month. Economists polled by IFR Markets predicted the index would slip to 73.0.
Munis were again unchanged Wednesday, but with a firmer tone, as the week's largest scheduled transaction - $700 million of Utah Transit Authority bonds - priced in the primary market.
Yesterday, the municipal market was weaker by about three or four basis points, following Treasuries.
The Bond Buyer 20-bond index of GO yields rose eight basis points this week to 4.96%, its highest level since Feb. 28, when it was 5.11%.
The 11-bond index rose six basis points to 4.88%, its highest level since Feb. 28, when it was 5.02%.
The revenue bond index rose seven basis points this week to 5.24%, its highest level since July 6, 2006, when it was 5.31%.
The 10-year Treasury note rose 18 basis points to 3.54%, which is the same level as two weeks ago.
The 30-year Treasury bond rose 17 basis points to 4.39%, but remained below its 4.57% level from two weeks ago.
The Bond Buyer one-year note index, however, fell 10 basis points to 1.67%, its lowest level since Feb. 13, when it was 1.02%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.22%, up one basis point from last week's 5.21%.
