NEW YORK – Despite very positive economic news that pushed investors out of Treasuries and into more risky markets, munis held their ground Thursday afternoon.
“We are seeing supply start to pick up but it is still extremely well received across the board,” a New York trader said. “The market definitely feels stronger today regardless of an equity rally and weak Treasury markets.”
He added, “There has definitely been a continued flight to slightly riskier assets throughout all markets to pick up the extra yield.”
Munis were firmer across the board early Thursday afternoon, according to the Municipal Market Data scale. The one-year yield was steady but outside two years, yields fell as much as three basis points.
On Wednesday, the two-year yield held steady at 0.29%, the record low set last Tuesday. The 10-year yield also closed unchanged at 1.83% for its fourth consecutive trading session. The 30-year yield fell three basis points to 3.21%.
Treasuries were much weaker Thursday afternoon. The two-year yield rose two basis points to 0.30% while the 30-year yield jumped six basis points to 3.15%. The benchmark 10-year yield spiked up seven basis points to 2.00%.
In the primary market, JPMorgan priced $440.8 million of Dallas-Fort Worth International Airport Board revenue refunding bonds, rated A1 by Moody’s Investors Service, and A-plus by Standard & Poor’s and Fitch Ratings. Maturities ranged from 2012 to 2035. Prices were not available by press time.
BOSC, Inc. priced $158.5 million of Lake Travis, Texas, Independent School District unlimited tax school building bonds, rated AA-plus by Standard & Poor’s and Fitch. Maturities ranged from 2014 to 2042. Prices were not yet available.
In the competitive market, JPMorgan won the bid for $96.8 million of triple-A rated Virginia general obligation bonds. Maturities ranged from 2013 to 2025. Prices were not available.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming.
Bonds from an interdealer trade of New York City Transitional Finance Authority 5s of 2038 yielded 3.46%, 10 basis points lower than where they traded Tuesday.
A dealer sold to a customer Dormitory Authority of the State of New York 5s of 2023 at 2.48%, seven basis points lower than where they traded Wednesday.
Another dealer sold to a customer District of Columbia 5s of 2028 at 3.26%, four basis points lower than where they traded Wednesday.
Bonds from an interdealer trade of Washington 5s of 2025 yielded 2.42%, three basis points lower than where they traded Wednesday.
Since the most recent rally began last Friday, muni-to-Treasury ratios have increased as munis underperformed Treasuries and became cheaper. The five-year ratio rose to 83.5% on Wednesday from 79.1% last Thursday. The 10-year muni-to-Treasury ratio rose to 94.8% from 91.7% last Thursday. The 30-year ratio increased slightly to 103.5% on Wednesday from 103.1%.