Most of The Bond Buyer's weekly yield indexes declined this week, as tax-exempts posted gains in most of the week's sessions, riding the coattails of a strengthening Treasury market.
Howard Mackey, president of the broker-dealer business unit of Rice Financial Products, said the muni and Treasury markets have improved over the past week based on a "pretty much knee-jerk reaction to what's happening with oil and the stock market."
However, while he sees the firmness in the market persisting for a bit, he thinks market conditions will be "tenuous as we go along."
"The Fed is not going to ease anymore, and it's questionable whether they would consider tightening by the end of the year, because the economy is still in pretty bad shape," Mackey said. "I don't think we're going to get out of these economic problems anytime soon."
"I think our markets are going to stay fairly firm, because I don't think there's anything on the horizon that's going to show that we're starting to get out of the economic malaise in which we find ourselves," he added.
The municipal market was unchanged to slightly weaker Friday, in light trading. Then on Monday, munis were again flat to slightly firmer in light trading, underperforming the Treasury market.
In the new-issue market Monday, King County, Wash., competitively sold $350 million of sewer revenue bonds to Citi with a true interest cost of 5.32%.
On Tuesday, tax-exempts were slightly weaker, with yields rising by about two or three basis points. Morgan Stanley also priced $221.4 million of health care facilities revenue refunding bonds for St. Louis Park, Minn.
On Wednesday, munis were unchanged with a slightly firmer tone after tax-exempts were weaker for much of the session. Munis were off on Treasury weakness early in the session, but did an about-face shortly after Treasuries did the same around midday.
Also on Wednesday, Morgan Stanley priced $1.9 billion of taxable sales and transfer tax receipts revenue bonds for the Chicago Transit Authority. On Thursday the municipal market was improved by about three basis points, following the strengthening Treasury market.
The 20-bond and 11-bond GO indexes fell three basis points this week, to 4.74% and 4.65%, respectively. But they remain above their levels from two weeks ago, when they were 4.65% and 4.56%, respectively.
The revenue bond index also fell three basis points this week, to 5.20%, but it remained above its 5.11% level from two weeks before.
The 10-year Treasury note yield fell 17 basis points, to 3.95%, which is the lowest since July 10, when it was 3.81%.
The 30-year Treasury bond yield fell 10 basis points, to 4.58%, which is the lowest since July 10, when it was 4.42%.
The one-year note index rose two basis points, to 1.59%, which is the highest since July 9, when it was 1.62%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.35%, up two basis points from last week's 5.33%.