Municipal bonds strengthened on Wednesday as yields on top-rated securities fell to at or near record low levels.
The yield on 10-year benchmark muni general obligation slipped one basis point to 1.29% from 1.30% on Tuesday, while the 30-year muni yield dipped one basis point to 1.93% from 1.94%, according to the final 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 1.93% set on Tuesday, while the 10-year yield at its record low of 1.29%, which was set on June 27.
U.S. Treasuries turned around in late activity on Wednesday to trade weaker, with the yield on the two-year Treasury rising to 0.58% from 0.56% on Tuesday.
Foreign investors' search for yield and safety was the early impetus for rising demand for the U.S. paper. Late in the day, minutes from the Federal Open Market Committee's June meeting showed the Federal Reserve wanted to have more data before raising interest rates and see how the fallout from the Brexit vote would affect markets. This caused stocks to rise and bonds to weaken.
The 10-year Treasury yield rose to 1.38% on Wednesday from 1.37% on Tuesday, which was a record low 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 increased to 2.15% from 2.14% on Tuesday, which was also a record low, down from its previous low of 2.22% set last Friday.
The 10-year muni to Treasury ratio was calculated at 93.3% on Wednesday compared to 95.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 89.7% versus 90.8%, 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.
While the bulk of the week's issuance will be coming out on Thursday, RBC Capital Markets priced Chester County, Pa.'s, $97 million of general obligation bonds on Wednesday.
The issue was priced to yield from 0.67% with a 2% coupon in 2017 to 1.89% with a 4% coupon in 2029.
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 the competitive slate for Thursday is Florida Board of Education's $216.18 million of Series 2016D full faith and credit public education capital outlay refunding bonds.
The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
In the negotiated sector, Wells Fargo Securities is expected to price North Carolina's Wake Forest University's $175 million of Series 2016 educational facilities revenue and revenue refunding bonds.
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.
