Yields on the long-end of the curve are dropping as investors flee equities during a tech-stock sell-off.
Yields on five- to fifteen-year maturities fell as much as two basis points on Monday, and 26-to 30-years declined as much as three basis points.
"The market is improving because the stock market is off by 102 points," a trader in Dallas said.
On Friday, investors began selling off tech-stocks after determining the prices were too high, according to the Associated Press. On Monday, the Nasdaq fell 1.4% to 4,072, following a 2.6% drop on Friday.
The Dow Jones Industrial Average was down 0.8% to 16,278, and the S&P 500 index was off 1% to 1,847 in midday trading Monday.
"When people flee from equities they go into fixed income," the trader in Dallas said.
Yields began falling on Friday after the employment situation report showed the unemployment rate had stayed at 6.7% in March and while nonfarm payroll jobs had improved from February they were up only 192,000, lower than the 215,000 gain analysts had predicted.
On Friday yields from three- to six-years declined as much as three basis points, and seven- to 30-years decreased as much as five basis points.
"The general tone of the market is pretty good on the heels of Friday's performance," a trader in New York said. "There is continued follow through on munis. Trading is sporadic, which is not uncommon for a Monday."
Bank of America Merrill Lynch held the second day of retail pricing on the week's largest deal, $650 million New York City Transitional Finance Authority future tax secured subordinate bonds.
Yields ranged from 0.63% with a 3% coupon in 2017 to 4.25% at par maturing in 2041. The bonds are callable at par in 2024. The bonds are rated Aa1 by Moody's Investors Service and AAA by both Standard and Poor's and Fitch Ratings.
Wells Fargo Securities will issue $220 million of general obligation bonds for the University of Connecticut. The bonds mature serially from 2015 to 2034 and carry a Aa3 rating from Moody's, a AA rating from S&P and a AA-minus from Fitch. The retail order period was scheduled to begin on Friday and continue Monday.
"People are looking at the University of Connecticut deal, and they're going to escalate that and do the institutional pricing this afternoon," the trader in Dallas said.
There are no deals over $100 million slated for Monday in the competitive market.
The state of Illinois will issue $250 million of general obligation bonds on Thursday, the largest deal in the competitive market this week. The bonds are rated A3 by Moody's and A-minus by Fitch.
The deal "is worth taking a look at because spreads have heightened in Illinois since the release of the pension report," the strategist in Missouri said.
"There was a little bit of a relief in the intermediate because some of those curves have moved up a little bit, while 10-30 rates have fallen," he said
Treasuries yields fell Monday afternoon, with the 30-year and the 10-year benchmark slipping three basis points each to 3.55% and 2.68%, respectively. The two-year notes slid one basis point to 0.40%.
