Municipal bonds strengthened on Wednesday as yields on top-rated securities fell to record low levels on an intraday basis.
The yield on 10-year benchmark muni general obligation fell one to three basis points from 1.30% on Tuesday, while the 30-year muni yield dropped by as much as two basis points from 1.94%, according to a read of Municipal Market Data's triple-A scale.
Tuesday's final read on the 30-year muni yield was a record low on the long end, eclipsing the record 1.99% set last Friday, while the 10-year yield was one basis point above its record low of 1.29% set on June 27.
Treasuries were mixed on Wednesday as the yield on the two-year Treasury rose to 0.57% from 0.56% on Tuesday. The 10-year Treasury yield rose to 1.38% on Wednesday from 1.37%. On Tuesday, the 10-year Treasury yield closed at a record low, down from the previous record of 1.40% set in July 2012, according to The Wall Street Journal. The yield on the 30-year Treasury bond on Wednesday was flat at 2.14%. On Tuesday, the 30-year Treasury yield also closed at a record low, down from its previous low of 2.22% set last Friday.
Traders and analysts see foreign investors' search for yield and safety as the impetus for rising demand for the U.S. paper.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 95.2% compared to 91.0% on Friday, while the 30-year muni to Treasury ratio stood at 90.8% versus 88.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,588 trades on Tuesday on volume of $7.01 billion.
Primary Market
Primary action picks up a bit as the market gets into gear after a quiet return from the Independence Day holiday.
The bulk of the week's issuance will be coming on Thursday, but RBC Capital Markets is expected to price Chester County, Pa.'s, $97 million of general obligation bonds on Wednesday.
The deal is rated triple-A by Moody's Investors Service, S&P Global Ratings and Fitch Ratings.
Since 2006, Chester County has issued about $887 million of debt, with the largest issuance occurring in 2009 when it sold $240 million of securities. The deal on Wednesday will make 2016 its highest issuance since 2009. The county issued under $100 million in 2006-2007 and 2010-2015.
On Thursday, the South Carolina Transportation Infrastructure Bank is competitively selling $204.02 million of Series 2016A revenue refunding bonds. The deal is rated A1 by Moody's and A by Fitch.
The S.C. TIB last competitively sold comparable bonds was on June 18, 2015, when Wells Fargo Securities won $157.1 million of Series 2015A revenue refunding bonds with a true interest cost of 2.498%.
Also on Thursday, Wells Fargo is expected to price North Carolina's Wake Forest University's $175 million of Series 2016 educational facilities revenue and revenue refunding bonds.
On the day-to-day calendar, there is a $216.180 million competitive offering from the Florida Board of Education for public education capital outlay refunding bonds. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $354.3 million to $6.67 billion on Wednesday. The total is comprised of $4.02 billion of competitive sales and $2.65 billion of negotiated deals.
