Municipal bond activity is light as the market is mostly in vacation mode with no major bond sales scheduled until 2019.
Nervous investors continued to flock to the safety of bonds amid political developments in Washington and worries of decelerating global growth.
Secondary market
Municipal bonds were slightly stronger on Wednesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell no more than one basis point in the one- to four-year and 15- to 30-year maturities. The remaining 10 maturities were either unchanged or higher by no more than one basis point.
High-grade munis were also slightly stronger, with yields calculated on MBIS' AAA scale dropping as much as three basis points in the one- to four-year, 10-year and the 15-year to 30-year maturities. The remaining nine maturities saw yields increase by less than one basis point.
Municipals were steady on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and the 30-year muni maturity remaining unchanged.
On Monday, the 10-year muni-to-Treasury ratio was calculated at 83.8% while the 30-year muni-to-Treasury ratio stood at 100.9%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Previous session's activity
The Municipal Securities Rulemaking Board reported 13,858 trades on Monday on volume of $3.719 billion.
California, New York and Texas were the municipalities with the most trades, with the Golden State taking 15.941% of the market, the Empire State taking 11.686% and the Lone Star State taking 10.863%.
Primary market
There are no scheduled bond sales. Issuance will start up again in the New Year.
Treasury auctions floating rate note
The Treasury Department Wednesday auctioned $18 billion of one-year 10-month floating rate notes with a high discount margin of 0.150%, at a 0.045% spread, a price of 99.808012.
The bid-to-cover ratio was 2.71.
Tenders at the high margin were allotted 52.82%.
The median discount margin was 0.120%. The low discount margin was 0.080%.
The index determination date is Dec. 24 and the index determination rate is 2.415%.
Gary E. Siegel contributed to this report.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
