Nearly all The Bond Buyer’s weekly yield indexes declined this week as long-end yields fell with each passing session and prices strengthened, mostly on the back of a light primary market.
“The market is sort of bouncing off recent relative value, but doing it on a basis of low supply,” said Evan Rourke, portfolio manager at Eaton Vance. “It seems like the bid is improved, with a few buyers in there taking the market a little higher, but it’s not a real deep market. It feels like if there was some supply,” yields might not stay at these levels.
Rourke also noted that the tax-exempt market is still seeing money flowing out of mutual funds, though the pace has slowed in recent weeks.
In the new-issue market this week, the Florida State Board of Education competitively sold $344.7 million of public education capital outlay refunding bonds to Bank of America Merrill Lynch with a true interest cost of 3.27%. Also, Washington’s Bellevue School District No. 405 competitively sold $197 million of unlimited-tax general obligation bonds to JPMorgan with a TIC of 4.29%.
The taxable market was supposed to see a $3.7 billion Illinois offering this week, but the state held the issue, originally scheduled to sell Thursday, until next week so investors can review Gov. Pat Quinn’s budget proposal.
The Bond Buyer 20-bond index of 20-year GO yields declined 19 basis points this week to 5.10%. This is the lowest level for the index since Jan. 6, when it was 5.08%.
The 11-bond GO index of higher-grade 20-year GO yields dropped 20 basis points this week to 4.84%, which is the lowest it has been since Jan. 6, when it was also 4.84%.
The revenue bond index, which measures 30-year revenue bond yields, fell seven basis points this week to 5.60%. It is now at its lowest level since Jan. 13, when it was also 5.60%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose two basis points this week to 0.53% but remained below its 0.56% level from two weeks ago.
The yield on the 10-year Treasury note fell 12 basis points this week to 3.58%, but it remained above its 3.56% level from two weeks ago.
The yield on the 30-year Treasury bond dropped 14 basis points this week to 4.66%, which is the lowest the yield has been since Jan. 27, when it was 4.57%.
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, finished at 5.71%, down nine basis points from last week’s 5.80%.