NEW YORK — Municipal yields continue to rise, riding the wave of news from Greece.
The market is softer by a few basis points, thanks to demonstrable signs that the Greek government is prepared to undertake austerity measures to keep its financial ship afloat. But with little new issuance and a rapidly approaching holiday weekend, the secondary market has been relatively sleepy, a trader in Los Angeles said.
“People are scared of this market; they’re sitting on their hands,” he said. “It’s softer by just a few basis points here and there. It’s deteriorating ever so slowly.
But yields won’t skyrocket anytime soon, the trader added.
“The situation in Europe, in Greece has made our market softer today,” the Los Angeles trader said. “But our market is not going to get killed until we get that huge influx in issuance, and we just don’t see that anytime soon.”
Muni yields have weakened, mostly at the longer end of the curve, according to Municipal Market Data. Tax-exempts maturing between 2012 and 2014 remain unchanged. Those maturing in 2015 are flat to two basis points higher.
Yields for maturities in 2016 and 2019 rose two to four basis points. Longer-term yields jumped three to five basis points.
The two-year yield closed at 0.42%, holding for the 13th consecutive day. The 10-year benchmark muni jumped three basis points to 2.70%. The 30-year yield also skipped up three basis points to 4.30%.
After yields strengthened to start the day, Treasuries pushed into the afternoon continuing on the path of Wednesday’s broader sell-off. The 10-year yield was up five basis points to 3.18%. The two-year and 30-year yields both inched up a basis point to 0.49% and 4.40%, respectively.
The news in Greece continues to affect the U.S. bond markets, according to Domenic Vonella, an analyst with Thomson Reuters.
“The situation in the Treasury market is helping to pressure munis with benchmark issues off by mostly three to five basis points on continued news that the Greek parliament secured enough votes to pass the austerity measures into law, in addition to a strong Chicago PMI figure for June.”
The stock market indexes have benefited from the flight from the flight to quality. Each has risen by roughly 1%.
