NEW YORK — Amid quiet trading, municipals are mostly holding on to the big gains in yield they’ve made throughout the week, particularly at the long end.
While Treasury yields backed up late Thursday afternoon, and are mostly hovering today, munis have given back little. Ratios to Treasuries are high enough to entice most investors, yet a slight primary market this week has left them little to play with, a trader in California said.
“People are wasted; it’s been that kind of week,” he said. “We’re holding up pretty well. Muni yields haven’t gone up, as Treasuries have. Compelling ratios are driving the market all the way along the yield curve. It’s hard not to look at them.”
After roughly a week of rallying, tax-exempt yields are narrowly mixed throughout the curve, according to Municipal Market Data. Maturities in 2012 to 2016, 2023 to 2025, and beyond 2038 are unchanged.
Those maturing between 2017 and 2022 are flat to one basis point lower. And munis maturing between 2026 and 2038 are flat to two basis points higher.
Thursday’s session ended with softening on the long end of the yield curve. The 10-year muni yield held steady at 2.26%, its lowest yield since Sept. 3. The two-year muni yield remained unchanged at 0.30%, its lowest yield in more than two years.
The 30-year muni yield, though, jumped four basis points to 3.88%, still its lowest level since Nov. 2.
Treasuries have also had an exciting week. They crossed into Friday afternoon as they started the day: mixed. Though, they were mostly firmer, particularly with intermediate and long-end maturities.
The benchmark 10-year Treasury yield, after a 26-basis-point jump, has fallen seven basis points to 2.27%. The 30-year yield, which Thursday blasted higher with a blistering 31-basis-point rise, dropped four basis points to 3.75%.
The two-year yield ticked up one basis point to 0.20%, two basis points above its all-time low.
Muni ratios to Treasuries are higher along most of the curve compared to their averages for 2011, even though they dropped from their highs on Aug. 9, according to MMD numbers.
After getting little support from the primary this week, there are expectations of a boost in volume to, at least, June levels. The industry expects $5.28 billion of deals next week, up from the measly $2.25 billion of municipal bond sales expected for this week.
The stock markets, which have been plunging and soaring in equal measure on successive days for most of the week, are all up by at least 0.76% Friday. The Dow Jones Industrial Average is up 1.31%, or almost 146 points so far.
