Most of The Bond Buyer’s weekly yield indexes increased this week as an earlier sell-off that pushed 30-year yields beyond the 5% threshold outweighed the rally that followed.
After 30-year tax-exempt triple-A yields crossed the 5% benchmark late last week, munis continued to weaken into the early part of this week before high yields spurred retail interest that helped drop yields back down to 4.95%.
“We were oversold and became absurdly attractive,” said Gary Gildersleeve, a portfolio manager at Evercore Wealth Management. “We’ve got a very steep yield curve and munis are ridiculously cheap.”
Gildersleeve said some of the buying the past few days has come from crossover buyers, but believes some retail investors also probably responded to the “magic” 5% yield the triple-A 30-year yield hit last week.
The Bond Buyer 20-bond index of 20-year general obligation yields rose two basis points this week to 5.41%.
That is the highest level for the index since Dec. 18, 2008, when it was 5.46%.
The 11-bond GO index of higher-grade 20-year GO yields also increased two basis points this week, to 5.16%, which is its highest level since Dec. 18, 2008, when it was 5.25%.
The revenue bond index, which measures 30-year revenue bond yields, gained six basis points this week to 5.66%. That is its highest level since Aug. 13, 2009, when it was also 5.66%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, declined three basis points this week to 0.52%, its lowest level since Nov. 10, 2010, when it was 0.46%.
The yield on the 10-year Treasury note rose 13 basis points this week, to 3.44%.
That is the note’s highest yield since May 13, 2010, when it was 3.55%.
The yield on the 30-year Treasury bond gained 10 basis points this week to 4.60%, which is its highest level since April 29, 2010, when it was also 4.60%.
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 5.93%, up 23 basis points from last week’s 5.70%.