Light issuance next week and considerable slowing in the pace of mutual fund outflows kept the municipal bond market steady Friday afternoon despite an already 50-basis-point drop on the 10-year yield this month.
Still, rise in prices and drop in yields weren’t enough to keep buyers out of the market. “The market is about flat and after new issuance this week guys are settling down,” a Virginia trader said. “But generally it seemed like this week was positive. New issuance was well received and flows are still negative but the trend is slowly reversing.”
This trader said supply next week is more than manageable and the 30-day calendar looks like. “It’s somewhat promising and supportive of a good tone.”
On Thursday, yields on the triple-A Municipal Market Data scale ended unchanged. The 10-year and 30-year yields were steady at 2.54% and 4.11%, respectively. The two-year was steady at 0.36% for the fifth session.
Yields on the Municipal Market Advisors scale ended as much as two basis points higher. The 10-year and 30-year yields rose one basis point each to 2.70% and 4.25%, respectively. The two-year was steady at 0.54% for the sixth consecutive trading session.
Treasuries continued to post gains Friday, helping support the bid in munis. The benchmark 10-year Treasury yield fell four basis points to 2.61% and the 30-year yield fell two basis points to 3.67%. The two-year yield slid one basis point to 0.34%.