NEW YORK – After a hectic week in the tax-exempt market that pushed yields down between two and nine basis points, munis took a breather Friday morning to recoup.
Throughout the week, new deals were priced very well with almost all yields lowered in institutional order periods and repricings.
The Municipal Market Data scale was not updated by press time. On Thursday, the two-year yield closed steady at 0.31%. The 10-year yield dropped four basis points to 1.88% while the 30-year yield dropped two basis points to 3.28%.
Treasuries were weaker Friday morning. The benchmark 10-year yield and the 30-year yield each rose four basis points to 2.00% and 3.16%. The two-year was steady at 0.27%.
This week, muni-to-Treasury ratios have fallen as munis outperformed Treasuries and became relatively more expensive. The five-year muni yield to Treasury yield fell to 100% from 102.4% last Friday. The 10-year ratio fell to 96.4% from 99% at the end of last week. The 30-year ratio rose slightly to 105.5% from 105.4%.
The slope of the yield curve has fallen to 308 basis points from 312 basis points last Friday as investors move further out on the yield curve. But the 10- to 30-year slope of the curve rose to 140 basis points from 135 basis points last Friday – hinting investors bought muni in the 10-year spot faster than they bought 30-year munis.
Looking to next week, the municipal market can expect $5.17 billion, off from this week’s revised $7.97 billion. In the negotiated market, $3.54 billion is expected to be priced, down from this week’s revised $5.59 billion. On the competitive calendar, $1.63 billion is expected to be issued, down from this week’s revised $2.38 billion.
