Nearly all The Bond Buyer’s weekly yield indexes for long-term bonds declined during this holiday-shortened week, bouncing back from a significant sell-off that permeated the market since the start of the month.
On the short end, The Bond Buyer one-year note index rose two basis points to 0.56%.
“We’re in bounce-back mode,” said Evan Rourke, portfolio manager at Eaton Vance. “The fear-related selling from last week is gone. The market feels pretty good.”
Amid a supply-driven rout, 30-year triple-A yields increased 76 basis points to 4.62% on Nov. 17, from 3.86% on Nov. 1, according to Municipal Market Data. However, after handling a hefty amount of supply, mitigated by a number of cancellations, the market appeared to hit bottom, starting a turnaround Nov. 18. Since then, 30-year yields have declined 31 basis points.
“I think [the rally] can continue,” Rourke said. “It will be interesting to see how the market handles the supply coming next week. Absolute yield levels are attractive and though there’s some sticker shock coming from richer levels, there is real value here.”
Leading the new-issue market this week, RBC Capital Markets priced $1.25 billion of various-purpose general obligation bonds for California.
The Bond Buyer 20-bond index of 20-year GO yields fell 12 basis points this week to 4.60%, but remained well above its 4.24% level from two weeks ago.
The 11-bond GO index of higher-grade 20-year GO yields dropped 13 basis points this week to 4.34%, but it is still much higher than its 3.98% level from two weeks ago.
The revenue bond index, which measures 30-year revenue bond yields, fell nine basis points this week to 5.16%, but remains above its 4.87% level from two weeks ago.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, is now at its highest level since July 7, when it was 0.59%.
Also this week, the yield on the 10-year Treasury note dropped 14 basis points to 2.77%. It is still higher than its 2.66% level from two weeks ago.
The yield on the 30-year Treasury bond declined 11 basis points this week to 4.18%, which is the lowest the yield has been since Nov. 4, when it was 4.04%.
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 5.30%, up one basis point from last week.
