Municipal bonds strengthened Friday morning, capping off a week of solid performance despite receiving the biggest slate of new bonds since early March.
Issuance this past week reached the highest level since early March when Puerto Rico brought $3.5 billion of GOs to the market. Total sales were $6.37 billion, including $4.14 billion of negotiated bonds and $2.23 billion of competitive bonds, according to Thomson Reuters data.
Long-term bonds strengthened the most this past week, with 30-year AAA bonds firming by about four basis points since April 17. Short-term bonds within five years softened as much as five basis points, while the 10-year yield remained steady.
"Long term munis are the real stars," J.R. Rieger, global head of fixed income at S&P Dow Jones Indices, wrote in a report Friday. "Despite a potentially rising interest rate environment the municipal bond market has returned equity like results in 2014 year to date."
High-yield bonds have returned 6.69% year-to-date, according to SPDJI's high-yield index. Corporate high-yield bonds have returned 3.48%, while the S&P 500 Index has posted a 2.26% return.
Yields on bonds on the intermediate part of the curve fell as much as two basis points Friday morning, while those maturing beyond 2039 dipped as much as three basis points. Short-term bonds were steady, according to the Municipal Market Data's triple-A scale.
Next week's total potential volume is expected to be light once again at $4.5 billion, down from this week's $7.5 billion issuance.
Municipal mutual funds saw inflows increase to $244.26 million for the week ended April 23 from the prior week's inflows of $74.03 million.
Treasuries strengthened Friday morning, with the 30-year yields falling six basis points to 3.43% and the 10-year benchmark dropping four basis points to 2.66%. The two-year notes slipped two basis points to 0.44%.
There are no deals over $100 million slated to enter the negotiated or competitive markets Friday.
