Municipal bond yields were unchanged Tuesday morning as Federal Reserve Chair Janet Yellen made her first presentation since replacing Ben Bernanke.
Yellen's testimony before the House Financial Services Committee indicated she expects "continuity" in the Federal Open Market Committee's policy. Yellen said she "strongly" supports the strategy, which she helped craft while a member of the panel.
"Let me emphasize that I expect a great deal of continuity in the FOMC's approach to monetary policy," Yellen testified, according to prepared text released by the Fed. "I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level."
Treasuries bumped up Tuesday morning, with the 30-year climbing two basis points to 3.68% and the 10-year by three basis points to 2.71%. The two-year yield gained two basis points to 0.34%. Municipals were steady, according to Municipal Market Data's AAA scale.
"I think that was maybe a little surprising that she's saying they've decided to seemingly stay the course when we're right up against the 6.5% unemployment threshold that we thought was going to mean something," one trader in New York said.
Unemployment was 6.6% in January, the government said in a Feb. 4 report. Total payroll jobs in January rose 113,000, following a revised increase of 75,000 for December and after a revised November increase of 274,000.
"How much longer can you have tapering and weakness?," the trader asked. "I thought maybe she'd look at some other indicators but it seems tapering at $20 billion a month is going to remain."
