Nearly all of The Bond Buyer’s weekly yield indexes declined this week as tax-exempts grew firmer amid light secondary trading.

“There was better buying at the front of the yield curve and also there was a little bit more supply at the long end,” said Matt Fabian, managing director at Municipal Market Advisors. “The reinvestment demand continued and [we also saw] sympathetic moves with the Treasuries. Treasury yields are just so strong. But [we’re still seeing] very, very light trading.”

Fabian said the market is adjusting to new conditions, rather than rallying. A rally implies movement and enthusiasm for bonds at the current prices, he said.

“The trade activity that we get is so limited, especially with tax-exempts,” Fabian said. “Yields are modestly lower. It is almost more of a correction to lower yields.”

The Bond Buyer 20-bond index of 20-year general obligation bond yields declined two basis points this week to 4.38%. This was the index’s lowest level since June 10, when it was 4.37%.

The 11-bond index of higher-grade 20-year GO yields declined four basis points this week to 4.10%, which is its lowest level since June 10, when it was 4.09%.

The revenue bond index, which measures 30-year revenue bond yields, dropped one basis point this week to 4.84%. This was its lowest level since June 10, when it was 4.82%.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, jumped eight basis points this week to 0.64%, which is its highest level since Sept. 9, 2009, when it was 0.78%.

The yield on the 10-year Treasury note declined 19 basis points this week to 2.94%, which is its lowest level since April 23, 2009, when it was 2.93%.

The yield on the 30-year Treasury bond declined 21 basis points this week to 3.88%, which is its lowest level since April 23, 2009, when it was 3.80%.

The weekly average yield to maturity on The Bond Buyer’s 40-bond municipal bond index, which is based on 40 long-term municipal bond prices, decreased one basis point this week to 5.17%.

Fabian said municipal market activity in June was fairly consistent with historical patterns.

“Everyone expects June to be a strong month because of the reinvestment, but that is not a reliable trend from a seasonal perspective,” he said. “Typically, issuance is much higher than what it was in June. In particular, tax-exempt issuance was roughly half, or non-Build America Bond issuance was roughly half of its five-year average in June.”

From a seasonal perspective, Fabian said, July is much more reliably positive.

Priti Patnaik contributed to this column.

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