NEW YORK – Municipal bonds continue to strengthen Wednesday morning as Treasuries rally, stocks sell off, and fears of slow growth continue to dominate investor sentiment.
An early read from Municipal Market Data suggests the triple-A curve is flattening as investors buy into the intermediate and long end of the curve.
Munis maturing beyond 2024 are seeing yields drop six to eight basis points, MMD says, with 2020-23 yields falling five to seven points. Shorter-term yields are three to five basis points firmer, but two-year yields are flat at after hitting a fresh calendar year low of 0.38% Tuesday.
The driver is Treasuries, where yet another rally is causing the 10-year yield to mine for new calendar year lows. In early trading it has dropped six basis points to 2.55%, a whopping 104 basis points lower than its yield in mid-April.
The 30-year yield, after dropping an incredible 19 basis points Tuesday, is down another 10 basis points at 3.80%. It stands 96 basis points from its high for the year, at 4.76% on Feb. 10.
The two-year Treasury yield is steady at 0.32%.
A number of muni issuers are on the calendar today to take advantage of the strong market.
Triple-A rated Montgomery County, Md., is on the calendar to sell $580 million of general obligation bonds.
The Michigan Finance Authority is readying $740 million of state aid revenue notes underwritten by Morgan Stanley.
And the New York City Transitional Finance Authority, which priced for retail two legs of its $900 million issue, is expected to complete its sale to institutions. About $172 million of TFA bonds will come to the competitive market.
The TFA deal is rated Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s and Fitch Ratings.
Meantime, the stock market continues to sell off for the ninth straight session with the Dow Jones Industrial Average down 104 points in early trading. Since July 22 the Dow has now fallen 994 points, or 7.81%.
