Nearly all The Bond Buyer's weekly yield indexes rose this week, as firmness that existed in the market prior to the three-day Memorial Day weekend eroded upon return due to rising Treasury yields.
"The overlay for the marketplace looks really pretty dim," said Howard Mackey, president of the broker-dealer business unit of Rice Financial Products. "I don't really see what's going to strengthen the market. Last week, it was kind of evident we were heading towards a 4% yield [for the 10-year Treasury note], and as it turns out, we did it in the next few days."
Mackey said that, right now, he thinks the only factor that could help the muni market "is the fact that you're going to have a lot of cash available, particularly in the month of June, from coupon payments and things of that nature."
"That will put some positive pressure on the market, in terms of maybe getting yields down a little bit," he said.
The municipal market was firmer by one or two basis points Friday ahead of the holiday weekend.
However, after returning from Memorial Day, muni yields weakened, climbing by two or three basis points Tuesday.
On Wednesday, tax-exempts were again weaker, following the Treasury market, which weakened on stronger-than-expected economic data. Leading the new-issue market Wednesday, Siebert, Brandford, Shank & Co. priced $500 million of water and sewer system second general resolution revenue bonds for the New York City Municipal Water Finance Authority.
Yesterday, munis were again weaker, this time by five or six basis points, as the new-issue market took center stage.
Goldman, Sachs & Co. yesterday postponed a $1.5 billion sale of senior-secured bonds for Florida's Citizens Property Insurance Corp. The deal is now day-to-day.
Among deals that did come to market, Goldman priced $520.5 million of electric revenue refunding bonds for the Sacramento Municipal Utility District.
The Bond Buyer 20-bond index of GO yields rose 10 basis points this week to 4.62%, which is the highest since May 8, when it was also 4.62%.
The 11-bond index rose nine basis points to 4.52%, the highest since May 8, when it was 4.54%.
The revenue bond index rose six basis points this week to 5.05%, the highest since May 8, when it was 5.07%.
In the same period, the 10-year Treasury note rose 16 basis points to 4.08%, which is the highest since Dec. 27, 2007, when it was 4.19%.
The 30-year Treasury bond rose 14 basis points to 4.77%, which is the highest since Oct. 18, 2007, when it was 4.78%.
The Bond Buyer one-year note index was unchanged this week at 1.79%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.12%, up four basis points from last week's 5.08%.