Long-term municipal bond yields rose on Monday during an equity rally.
Yields of bonds maturing in three- to 27-years increased by up to one basis points and maturities of 28-to 30-years were up as much as two basis points on Monday, according to Municipal Market Data's Triple-A scale.
"There is an equity rally, and muni prices are falling somewhat slowly," a trader in New York said.
The Dow Jones Industrial Average rose 0.29% or 47.53 points to 16,408.99 from its 16,363.2 open on Monday. Pharmaceutical giant Pfizer's renewed bid to buy out British-Swedish pharmaceutical and biologics company AstraZeneca for $98.9 billion prompted this increase, according to the Wall Street Journal.
Long-term municipal bonds performed well last week. Yields for the 30-year fell five basis points to 3.63% on the 30-year at the close Friday from Monday's close, according to data provided by Municipal Market Advisors.
The Standard & Poor's Dow Jones index showed high-grade municipal bonds maturing in 20-years on Thursday had a 10.2% return year-to-date, with yields dropping more than 65 basis points year-to-date.
"I think the municipal market is a tad softer on Monday," the trader in New York said. "We got a pretty good rally last week and I think investors are hesitant about whether that will continue this week."
There is only one deal totaling over $100 million scheduled for Monday during a week where issuance is expected to total a modest $4.5 billion, according to data provided by The Bond Buyer and Ipreo.
Citigroup Global Markets won the bid for $109.6 million of general obligation bonds for the Wayzata Independent School District 284, Minn. Yields ranged from 0.92% with a 1.50% coupon in 2018 to 3.17% with a 3.75% coupon in 2035.
The bonds are callable at par in 2023 and is rated AAA by Moody's Investors Service.
"I'm not hearing about anyone buying today's competitive GO, we're not looking at it particularly really," a second trader in New York said. "Three's nothing really that jumps out at me scheduled for this week."
Treasuries weakened Monday afternoon, with the 30-yields climbing four basis points to 3.48% and the 10-year benchmark rising three basis points to 2.70%. The two-year notes were unchanged from Friday's market close at 0.45%. Fixed income typically does not perform as well when equities rally, according to market participants.
"I'll expect we'll see more of a yield cut on MMD by the end of the day," the first trader in New York said.
