Treasuries weakened Tuesday morning with yields on 10-year government bonds jumping to the highest yield in about two weeks, and munis followed.
"On Monday, Janet Yellen's speech led to an unwind of curve flattening bets, triggering an outperformance of short-term rates and an underperformance of long-term rates as accounts closed out their positions," Janney's Guy Lebas said in a report Tuesday.
Yields on the 10-year Treasury benchmark rose three basis points to 2.79%, the highest level since March 19. The 10-year yield has gained 90 basis points from 1.86% a year ago, though yields are below the average 3.46% over the past decade, according to MMD data.
Long-term Treasury yields dropped four basis to 3.64. Treasuries were unchanged for most of the day Tueday. Two-year notes were unchanged at 0.45%.
Munis followed Treasuries as yields on bonds up to six-years were steady on Wednesday morning, though bonds from seven years and out jumped as much as two basis points.
The Regents of the University of California's two-part $968.24 million general revenue bonds will come to market Wednesday, with the $559.49 million tax-exempt portion to be priced for retail and the $408.75 million taxable portion accepting indications of interest.
The bonds are rated Aa2 by Moody's Investors Service and AA by Standard & Poor's, and have Wells Fargo Securities as the managing underwriter for the tax-exempts and Goldman, Sachs & Co. as lead underwriter for the taxable bonds.
The Karegnondi Water Authority of Genesee, Lapeer and Sanilac counties in Michigan brought $220.5 million water supply bonds late Monday afternoon, with yields ranging from 1.46% with a 3% coupon in 2017 to 4.89% at a 5% coupon in 2043.
The bonds, which feature an optional par call in 2023, were brought to market by J.P. Morgan Securities and carry A2 and A-plus ratings from Moody's and S&P, respectively.
In the competitive market, Lincoln Public School District in Nebraska will sell $120 million GOs, rated AA1 by Moody's and AAA by S&P.
