NEW YORK – Tax-exempts continued to weaken as other markets rallyed then fell after the Federal Open Market Committee
The biggest headline in the fixed-income market was the FOMC’s announcement that it plans to keep federal funds rate target at zero to 0.25%, and will extend its “operation twist” program until the end of the year, with the Fed purchasing an additional $267 billion in long-term securities.
“While we expected an extension of Twist, we thought it would be a three-month extension, in part because we did not expect the Fed would want to run its holdings of short-dated paper down to essentially zero,” wrote economists at RDQ Economics. “Instead, the Fed delivered a six-month extension at roughly the same pace and in exactly the same maturities – sell zero- to three-year paper and buy 6-year-plus paper.”
After that announcement, Treasuries rallied on the long end as the yield curve flattened. The benchmark 10-year yield fell five basis points to 1.63% from where it traded Wednesday morning while the 30-year yield fell seven basis points to 2.72% from morning levels. The two-year yield jumped to 0.32%.
The rally in Treasuries did not translate over to munis as the tax-exempt market continued to weaken. Inside 11 years, yields were steady. Outside 12 years, yield rose as much as three basis points.
On
In the primary market, JPMorgan priced $580.7 million of
Goldman, Sachs & Co. priced and repriced $624.9 million of
The first portion of $540 million is taxable bonds, yielded 0.45% price at par in 2013. The yield was lowered five basis points from preliminary pricing. Prices on credits maturing between 2014 and 2017 were not available by press time.
The second portion $84.9 million of tax-exempt bonds yielded 0.45% with a 5% coupon in 2014. The yield was lowered five basis points from preliminary pricing.
In the competitive market, JPMorgan won the bid for $141.6 million of Georgia GOs. Pricing details were not available.