Yields on municipal bonds remained lower Friday afternoon, as scant issuance meant high prices and economic concerns about the world economy pushed investors out of equities.
"Light new issue volume and strong reinvestment flows have provided propellant for falling muni yields, with less than $5 billion in pricings expected next week, placing January volume well below last year's $27 billion pace," Janney Capital Markets said in its daily report Friday.
Municipal bond mutual funds reported inflows for a second week Thursday, with the market investing $86 million in the week ended Jan. 22, according to Lipper FMI data.
U.S. stocks fell measured by the Dow Jones Industrial Average fell for the third day Friday. The Standard & Poor's 500 index also fell. Municipal bonds, which often move inversely to equities markets, rallied by as much as six basis points on medium to long-term bonds, traders said.
"We're reacting to the stock market and whatever crisis is going on," a trader in New York said in an interview. "There is a flight to quality, it's more of a world-wide situation. The world economy is not as strong as everyone was making it out to be, and that's probably what is going on in Davos."
Business, economic and political leaders met this week at the World Economic Forum in Davos, Switzerland, to discuss the future of financial markets as many of the world's leading nations emerge from crises.
Muni bond yields on the Municipal Market Data triple-A scale plunged across the curve Friday morning, with yields falling as much as seven basis points on bonds maturing from eight to 14 years out.
The MMD 10-year triple-A benchmark yield has fallen about 30 basis points since Jan. 1, while the 30-year benchmark on MMD has fallen by more than 40.
Treasuries yields also slid, with the 10-year yield sliding five basis points to 2.74% and the 30-year falling three basis points to 3.66%. The two-year fell three basis points to 0.35%.
