Top-rated municipal bonds ended weaker on Thursday, traders said, as primary offerings dwindled down to the week's last few big deals.

Secondary market
The yield on the 10-year benchmark muni general obligation increased one basis point to 1.95% from 1.94% on Wednesday, while the 30-year GO yield rose one basis point to 2.74% from 2.73%, according to the final read of Municipal Market Data's triple-A scale.

Treasuries were weaker as well on Thursday. The yield on the two-year Treasury rose to 1.36% from 1.35% on Wednesday, the 10-year Treasury yield gained to 2.31% from 2.29% and the yield on the 30-year Treasury bond increased to 2.93% from 2.90%.

The 10-year muni to Treasury ratio was calculated at 84.4% on Thursday, compared with 84.9% on Wednesday, while the 30-year muni to Treasury ratio stood at 93.6% versus 94.3%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 37,665 trades on Wednesday on volume of $12.39 billion.

Primary market
On Thursday, the Florida Department of Management and Services competitively sold $187.83 million of Series 2017A facilities pool revenue refunding bonds.

Raymond James & Associates won the bonds with a true interest cost of 2.3874%. The deal was priced to yield from 0.88% with a 5% coupon in 2018 to 3.23% with a 3.125% coupon in 2038.

The deal is rated Aa2 by Moody’s Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.

RBC Capital Markets priced the Reading School District, Pa.’s $91.94 million of Series 2017 GOs on Thursday.

The bonds were priced to yield from 1.51% with a 1.5% coupon in 2019 to 2.82% with a 5% coupon in 2028. The bonds were also priced to yield 3.24% with a 3% coupon in 2030 and 3.46% with a 3.25% coupon in 2032. The bonds were also priced to yield from 3.57% with a 3.375% coupon in 2034 to 3.34% with a 5% coupon in 2038.

The entire deal is insured by Assured Guaranty Municipal Corp. and is rated AA by S&P.

Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $2.0 billion to $8.52 billion on Thursday. The total is comprised of $4.34 billion of competitive sales and $4.18 billion of negotiated deals.

Tax-exempt money market funds see inflows
Tax-exempt money market funds experienced inflows of $26.5 million, bringing total net assets to $130.00 billion in the week ended July 24, according to The Money Fund Report, a service of iMoneyNet.com.

This followed an outflow of $200.5 million to $129.98 billion in the previous week.

The average, seven-day simple yield for the 231 weekly reporting tax-exempt funds was unchanged at 0.36% from the previous week.

The total net assets of the 852 weekly reporting taxable money funds increased $10.62 billion to $2.480 trillion in the week ended July 25, after an inflow of $1.10 billion to $2.469 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 0.64% from 0.63% in the prior week.

Overall, the combined total net assets of the 1,083 weekly reporting money funds increased $10.65 billion to $2.610 trillion in the week ended July 25, after inflows of $896.3 million to $2.599 trillion in the prior week.

WFII releases long-term guidance
Wells Fargo Investment Institute on Thursday released its latest capital market assumptions for asset class performance over the next 10 to 15 years.

CMAs are long-term averages designed to help in the development of investment planning and reflect what investors may experience through one to two full economic and market cycles.

WFII said six expectations shaped its 2017 strategic view:

  • inflation lower than long-term averages, but above the Fed’s 2% target;
  • a slow rise in interest rates to accommodate improving economic growth and moderate inflationary pressures;
  • higher volatility in the capital markets and lower-than-historical total returns for many asset classes;
  • developed market economic growth will improve and emerging market growth will level off;
  • modest commodity price gains as supply and demand balance; and
  • alternative investments playing a greater role in potentially reducing traditional asset-class risk in a diversified portfolio.

WFII’s hypothetical return and risk assumptions and expectations are unchanged for global fixed income, global equities, global real assets and global alternative investments.

Jacob Schneider contributed to this report.

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