Munis snooze after Trump impeachment, stocks surge

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The news of the House of Representatives voting to impeach a president for only the third time ever had 'zero' impact on the municipal market, and stocks soared.

"[The impeachment has had] zero impact," said one Texas trader. "I would think treasury rates would have the largest impact, however, the impact has been muted therefore munis are snoozing."

With a Republican-controlled Senate, investors fully expect Trump to be acquitted and therefore will not be removed from office.

"Investors have been blocking out Impeachment noise and are focusing on things like NAFTA and the trade deal with China," the trader said. "With issuance looking bleak for the final days of the year, so we will have to see what geopolitical updates take place."

Secondary market
Munis were mixed on the MBIS benchmark scale, with yields increasing by no more than a basis point in the 10-year maturity and decreasing by less than a basis point in the 30-year. High-grades were weaker, with yields on MBIS AAA scale lowering less than one basis point in both the 10- and 30-year maturities.

On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10- and 30-year maturities moved up two basis points to 1.45% and 2.09%, respectively.

The 10-year muni-to-Treasury ratio was calculated at 78.4% while the 30-year muni-to-Treasury ratio stood at 92.6%, according to MMD.

Stocks shrugged off the impeachment news andsurged to all-time intraday highs. Treasuries yields mostly went fell.

The Dow Jones Industrial Average was up about 0.45% as the S&P 500 Index rose 0.44% while the Nasdaq gained 0.60%.

The Treasury three-month was yielding 1.546%, the two-year was yielding 1.611%, the five-year was yielding 1.718%, the 10-year was yielding 1.908% and the 30-year was yielding 2.344%.

Primary market
Morgan Stanley got the written award on the Dormitory Authority of the State of New York’s (Aa1/ AA+) $3.40 billion of state personal income tax revenue general purpose tax-exempt and taxable bonds.

RBC Capital Markets received the written award on Hamilton County, Ohio’s $221.19 million of healthcare facilities federally taxable refunding revenue bonds for The Christ Hospital. The entire deal is wrapped with Assured Guaranty and is rated AA by S&P Global Ratings.

JP Morgan received the written award on the Arizona Board of Regents’ $112.73 million of Northern Arizona University system revenue refunding bonds and taxable bonds. The whole deal is insured by Build America Mutual and is rated A1 by Moody’s and AA by S&P.

Muni money market funds see outflow
Tax-exempt municipal money market fund assets declined by $629.0 million, lowering their total net assets to $137.85 billion in the week ended Dec. 16, according to the Money Fund Report, a publication of Informa Financial Intelligence.

The average seven-day simple yield for the 187 tax-free and municipal money-market funds increased to 0.72% from 0.69% in the previous week.

Taxable money-fund assets fell $27.52 million in the week ended Dec. 17, bringing total net assets to $3.409 trillion. The average, seven-day simple yield for the 803 taxable reporting funds stayed at 1.29% from the prior week.

Overall, the combined total net assets of the 990 reporting money funds decreased by $28.15 billion to $3.547 trillion in the week ended Dec. 17.

Bond Buyer indexes mostly unchanged
The weekly average yield to maturity of the Bond Buyer Municipal Bond Index, which is based on 40 long-term bond prices, rose slightly to 3.62% from 3.61% in the previous week.

The Bond Buyer's 20-bond GO Index of 20-year general obligation yields was unchanged from 2.74% the week before.

The 11-bond GO Index of higher-grade 11-year GOs remained at 2.27% from the prior week.

The Bond Buyer's Revenue Bond Index stayed at 3.21% from last week.

The yield on the U.S. Treasury's 10-year note inched up to 1.91% from 1.90% while the yield on the 30-year Treasury grew to 2.35% from 2.32% in the prior week.

Previous session's activity
The MSRB reported 36,755 trades Wednesday on volume of $13.444 billion. The 30-day average trade summary showed on a par amount basis of $11.88 billion that customers bought $6.42 billion, customers sold $3.36 billion and interdealer trades totaled $2.09 billion.

California, New York and Texas were most traded, with the Golden State taking 15.775% of the market, the Empire State taking 10.931% and the Lone Star State taking 9.554%.

The most actively traded security was the Texas Private Activity Board’s taxable refunding revenue bonds, 3.922s of 2049, which traded 13 times on volume of $44.08 million.

Treasury auctions announced
The Treasury Department announced these auctions:

$32 billion seven-year notes selling on Dec. 26;

$41 billion five-year notes selling on Dec. 24;

$40 billion two-year notes selling on Dec. 23;

$36 billion 182-day bills selling on Dec. 23; and,

$42 billion 91-day bills selling on Dec. 23.

Treasury auctions bills
The Treasury Department Thursday auctioned $35 billion of four-week bills at a 1.510% high yield, a price of 99.882556.

The coupon equivalent was 1.537%. The bid-to-cover ratio was 3.19.

Tenders at the high rate were allotted 65.01%. The median rate was 1.500%. The low rate was 1.480%.

Treasury also auctioned $35 billion of eight-week bills at a 1.555% high yield, a price of 99.758111.

The coupon equivalent was 1.515%. The bid-to-cover ratio was 2.78.

Tenders at the high rate were allotted 76.03%. The median rate was 1.515%. The low rate was 1.490%.

TIPs auctioned
The Treasury Department Thursday auctioned $15 billion of four-year 10-month inflation-indexed notes with a 1/8% coupon, at a 0.020% high yield, an adjusted price of 100.801136.

The bid-to-cover ratio was 2.69.

Tenders at the high yield were allotted 42.84%. All competitive tenders at lower yields were accepted in full.

The median yield was negative 0.009%. The low yield was negative 0.060%.

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.

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Primary bond market Secondary bond market Money market funds State of California State of New York State of Texas New York State Dormitory Authority Hamilton County Arizona Board of Regents
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