Nearly all The Bond Buyer’s weekly yield indexes rose this week as tax-exempts weakened in almost all the week’s sessions.
Howard Mackey, president of the broker-dealer business unit of Rice Financial Products, said that the “biggest issue has probably been a fair amount of supply that has come into the market this week .”
The New York City Transitional Finance Authority led the way in the primary market this week, with a $600 million deal priced by Citi.
“We had a pretty nice-sized calendar,” Mackey said. “The market went up pretty fast on the tax-exempt side because of the fear of BAB issuance overshadowing and crowding out tax-exempt supply. So from that standpoint, you got a pretty big run-up in the tax-exempt market as you did the BAB market.
“Now, you’ve also seen the Treasury market sell off rather significantly over the past few weeks, and that’s filtered into the rest of the marketplaces,” he continued. “BABs ran up fairly well, so now they’re being priced a lot closer to the market, just really basically due to the process of price discovery, a phenomenon that you deal with when you bring a new security into the market. And so, as that has happened, you’ve gotten a little more realism in the tax-exempt market.”
The Bond Buyer 20-bond index of 20-year general obligation bond yields rose 10 basis points this week to 4.71%. That is the highest level for the index since April 16, when it was 4.78%.
The 11-bond index of higher-grade 20-year GO yields also rose 10 basis points this week, to 4.45%. That is the highest the index has been since April 30, when it was also 4.45%.
The revenue bond index, which measures 30-year revenue bond yields, also rose 10 basis points this week, to 5.63%, which is the highest level for the index since April 16, when it was also 5.63%.
The 10-year U.S. Treasury note yield rose five basis points this week to 3.71%. That is the highest yield for the 10-year note since Nov. 13, 2008, when it was 3.86%.
The 30-year U.S. Treasury bond yield also rose five basis points this week, to 4.58%, which is the highest it has been since July 31, 2008, when it was also 4.58%.
However, the Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, was unchanged this week at its all-time low of 0.58%. The index began on July 12, 1989.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.42%, up 15 basis points from last week’s 5.27%.
