Nearly all The Bond Buyer’s weekly yield indexes rose this week, reflecting sustained weakness in the municipal market, despite the one-year note index declining to an all-time low.
“The market’s gotten a little cheaper,” said George Strickland, managing director and portfolio manager at Thornburg Investment Management. “Up until [yesterday], I’d say credit was outperforming, but [yesterday], credit seems to be taking a bit of a hit along with everything else. So we’ll see what comes, but the momentum seems to be going south right now.
“It’s just selling pressure, I think,” he said. “Not so much in the new-issue market, but there’s been some pretty significant selling in the secondary market.”
Leading the new-issue market this week, Merrill Lynch & Co. priced $412.7 million Wednesday for the New Jersey Transportation Trust Fund Authority, which included $270 million of taxable Build America Bonds.
The Bond Buyer 20-bond index of 20-year general obligation bond yields rose 17 basis points this week to 4.61%. This is the highest level for the index since May 7, when it was 4.62%.
The 11-bond index of higher-grade 20-year GO yields also rose 17 basis points this week, to 4.35%, which is the highest the index has been since May 7, when it was 4.37%.
The revenue bond index, which measures 30-year revenue bond yields, rose 11 basis points this week to 5.53%, which is the highest level for the index since May 7, when it was 5.57%.
The 10-year Treasury note yield rose 30 basis points this week to 3.66%. It’s the highest the yield has been since Nov. 13, 2008, when it was 3.86%. The 10-year note’s yield has risen in seven of the past 10 weeks, for a total increase of 106 basis points since its most recent low of 2.60% on March 19.
The 30-year Treasury bond yield rose 22 basis points this week to 4.53%, which is the highest level for the bond’s yield since Aug. 7, 2008, when it was 4.55%. The 30-year bond’s yield has risen in seven of the past eight weeks, for a total increase of 96 basis points since its most recent low of 3.57% on April 2.
However, The Bond Buyer one-year note index, which measures one-year tax-exempt yields, declined 16 basis points this week to an all-time low of 0.58%. The previous low had been 0.59%, which was first set on April 22. The index began on July 12, 1989.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.27%, up two basis points from last week’s 5.25%.
