The tax-exempt market continued its eight session gain Friday morning as munis follow Treasuries higher.
While usually a quiet Friday ahead of Labor Day weekend, activity picked up speed when Fed Chairman Ben Bernanke said the Central Bank would provide additional accommodation if needed at the annual symposium at Jackson Hole, Wyo.
“Govies are higher,” a New York trader said. “There is some buying.”
On Thursday, the 10-year Municipal Market Data yield and the 30-year yield fell one basis point each to 1.74% and 2.89%, respectively. The two-year closed at 0.29% for the 26th consecutive session.
Munis have seen mixed results throughout the month of August – weakening in the first few weeks and posting strong gains in the latter portion of the month that erased almost all those losses. Over the past seven trading sessions, the 10-year yield has plummeted 16 basis points while the 30-year yield has plunged 13 basis points.
The 10-year MMD yield now trades only 14 basis points above its record low of 1.60% set July 26 and the 30-year yield hovers 10 basis points above the 2.79% record low set July 25.
Treasuries rallied on Bernanke’s speech. The benchmark 10-year yield dropped three basis points to 1.60% while the 30-year yield plunged four basis points to 2.71%. The two-year yield fell two basis points to 0.25%.