NEW YORK — Municipal bond yields have started following the movements of Treasuries a little more closely. Both moved slightly higher in the morning, only to change course and firm crossing into the afternoon.
The secondary has been mixed, following a relatively light morning. Investors are still looking at the yields and wondering where to find value and yield, a trader in California said.
“We have people who are wondering where to find value and where to find yields,” he said. “We have some people that, against recommendations, try to step out on the credit spectrum in order to get yields. To go to something that is a high-grade security, you’re certainly not going to get a lot of return for that.”
Tax-exempt yields almost resemble a smile, of sorts: they’re unchanged at the edges and lower in the intermediate range. Yields are steady through four years and out beyond 17 years, according to the Municipal Market Data scale. Those between five and 17 years are flat to two basis points firmer.
The benchmark 10-year muni yield Wednesday held at 2.45%. It sits 48 basis points above the record low it held on Sept. 23.
The 30-year yield remained at 3.69%. The two-year yield hovered at 0.45% for a sixth consecutive session.
Treasury yields have started to rally, crossing noon. The benchmark 10-year Treasury yield has fallen five basis points to 2.12%. The 30-year has decreased two basis points to 3.16%. The two-year yield has inched down one basis point to 0.27%.
“We migrate in the direction of wherever Treasuries go,” the California trader said.
The industry predicts this week’s new issuance will total $6.7 billion. Last week, the municipal bond market saw $4.5 billion.
Three deals — two negotiated and one competitive — were expected to provide both a disproportionate share of the volume as well as direction for the market. One deal, $1.8 billion of California general obligation bonds, arrived with concessions. Another, $1 billion of New York City’s Hudson Yards Infrastructure Corp. senior revenue bonds, rolled in with tight pricing. In all, the market reacted with yields mostly holding their ground.
In economic news, the National Association of Realtors reported Thursday that existing home sales fell 3.0% in September to a seasonally-adjusted 4.91 million. August sales were revised upward to 5.06 million, from the 5.03 million figure reported last month.
The median sales price fell to $165,400 from $171,200 in September. The number has fallen 3.4% from a year ago.
