NEW YORK – The tax-exempt market was stronger Friday afternoon, reversing a week-long losing streak, as muni yields followed Treasury yields lowered.
Munis were steady to slightly firmer Friday afternoon, according to the Municipal Market Data scale. Yields inside 13 years were steady while yields outside 14 years fell as much as two basis points.
On Thursday, the 10-year yield jumped five basis points to 1.90% while the 30-year yield spiked up three basis points to 3.19%. The two-year was steady at 0.32% for the fifth consecutive trading session.
Treasuries were slightly stronger Friday afternoon but had pared morning gains. The benchmark 10-year yield and the 30-year yield were each down two basis points to 1.63% and 2.74%. The two-year was steady at 0.28%.
Throughout the week, muni-to-Treasury ratios fell as munis outperformed Treasuries and became relatively more expensive. Munis weakened, but not as much as their taxable counterparts.
The two-year muni yield to Treasury yield ratio fell to 114.3% on Thursday from 123.1% last Friday. The 10-year ratio dropped to 115.2% from 119.9% last Friday. The 30-year ratio fell to 115.6% on Thursday from 120.6% at the end of last week.
The slope of the yield curve rose this week as investors traded in longer-duration bonds for shorter maturities. The one- to 30-year slope of the curve grew widened to 299 basis points from 284 basis points last Friday. The one- to 10-year portion of the curve also widened to 175 basis points from 155 basis points the week before.
Looking to next week, over $12 billion is expected to be priced, up from this week’s revised $6.35 billion. On the negotiated calendar, $10.96 billion is expected to come to market, up from this week’s revised $4.52 billion. In competitive deals, $1.08 billion is expected to be sold, down from this week’s revised $1.83 billion.