Municipals mixed as Treasuries weaken

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Municipals were mixed at midday as Treasury bonds weakened while the last of the week’s supply trickled into the primary market

Secondary market
According to a mid-session read of the MBIS benchmark scale, municipal bonds were mixed on Thursday. Benchmark muni yields dipped less than one basis point in the four- to 12-year and 15- to 24-year maturities, rose as much as one basis points in the one- to three-year and 25- to 30-year maturities and remained unchanged in the 13- and 14-year maturities.

High-grade munis were also mixed, with yields calculated on MBIS' AAA scale falling less than one basis point in the six- to 25-year maturities and rising as much as one basis point in the one- to five-year and 26- to 30-year maturities.

Municipals were mixed on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation remaining steady while the yield on the 30-year muni maturity rose as much as one basis point.

Treasury bonds were stronger amid continued stock market volatility. The Treasury 30-year was yielding 3.169%, the 10-year yield stood at 2.915%, the five-year was at 2.755%, the two-year was at 2.754% while the Treasury three-month bill stood at 2.417%.

On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 82.8% while the 30-year muni-to-Treasury ratio stood at 100.6%, 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 49,894 trades on Wednesday on volume of $15.42 billion.

California, New York and Texas were the municipalities with the most trades, with the Empire State taking 14.108% of the market, the Golden State taking 13.873% and the Lone Star State taking 8.568%.

Muni money market funds see inflows again
Tax-free municipal money market fund assets increased $1.22 billion, raising their total net assets to $140.80 billion in the week ended Dec. 10, according to the Money Fund Report, a service of iMoneyNet.com.
The average seven-day simple yield for the 190 tax-free and municipal money-market funds was lower to 1.23% from 1.26% last week.

Taxable money-fund assets increased $85.82 billion in the week ended Dec. 11, bringing total net assets to $2.816 trillion.

The average, seven-day simple yield for the 805 taxable reporting funds rose to 1.90% from 1.88% last week.

Overall, the combined total net assets of the 995 reporting money funds gained $87.04 billion to $2.957 trillion in the week ended Dec. 11.

Primary market
Bank of America Merrill Lynch received the written award on the Public Facilities Financing Authority of the City of San Diego’s $243.18 million of Series 2018A subordinated water revenue bonds.

The deal is rated Aa3 by Moody’s Investors Service and AA-minus by Fitch Ratings.

Bond sale results

California
Click here for the San Diego award

Click here for the San Diego deal

Bond Buyer 30-day visible supply at $4.49B
The Bond Buyer's 30-day visible supply calendar decreased $3.18 billion to $4.49 billion for Thursday. The total is comprised of $1.20 billion of competitive sales and $3.28 billion of negotiated deals.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.

For reprint and licensing requests for this article, click here.
Secondary bond market Primary bond market Municipal bond funds State of California State of New York State of Texas San Diego Public Facilities Financing Authority
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