Yields on municipal bonds remained down into Friday afternoon as demand for new bonds drove prices in secondary trading.
"It's scarcity of bonds supporting munis at this point," a trader in New York said in an interview. "There's not a lot of product out there and there's always good business in January. It seems like people are getting frustrated with not finding bonds at the level they're looking for."
Potential long-term volume was estimated at $4.88 billion this week, including $855 million of New York City Transitional Finance Authority bonds and $130.7 million of Cook County, Ill., refunding general obligations.
Volume had abated by Friday, the trader noted, after yields slid as much as six basis points on Thursday. "We're off the pace of yesterday, we've been running at least 20% above normal levels for most of the week," the trader said. "Today is looking more normal — I expect that has to do with us going into a long weekend."
Inflows into mutual funds holding municipal bonds was reported by Lipper Thursday, ending a 33-week run of outflows. Investors put $103 million into the funds, data show.
"Last week it sounded like we were turning the corner on that," the trader said. "At some point it had to turn around, it couldn't keep going like that forever."
Yields on the Municipal Market Data triple-A scale were down as much as three basis points on bonds with maturities beyond 2030. Those in the front and intermediate parts of the curve were down by as much as one to two basis points, respectively.
Treasury yields were mixed Friday morning, with the two, 10, and 30 year yields all down one basis point to 0.39%, 2.83% and 3.76%, respectively.
