The Bond Buyer's weekly yield indexes rose this week, as the municipal market weakened in all but one of the week's sessions.
Additionally, market participants digested news that Moody's Investors Service late Monday put its triple-A ratings of bond insurers Financial Security Assurance Inc. and Assured Guaranty Corp. on review for possible downgrade. "The market has had somewhat of a negative tone," said Evan Rourke, portfolio manager at MD Sass. "I think everyone was concerned about the news and what that's going to mean for the bond market. Dealers are certainly not participating, and some of the competitive sales are still hung up, so guys are sitting on competitive balances out there."
"In general, just a lack of strong interest. Though there was enough volume to bounce the market back in sympathy with the Treasury market" yesterday, he added.
The municipal market was weaker by about three or four basis points Friday, following Treasuries. Then Monday, yields pushed slightly higher, but finished the session largely unchanged.
On Tuesday, however, market participants weighed the FSA and Assured Guaranty news, and both muni and Treasury yields rose, tax-exempts by about four basis points.
On Wednesday, municipals were weaker by about three basis points as participants continued to struggle with the bond insurer news. In the new-issue market, Citi priced $625 million of revenue bonds for the Florida Hurricane Catastrophe Fund Finance Corp., and the Port Authority of New York and New Jersey competitively sold $500 million of consolidated bonds to Merrill Lynch & Co.
But yesterday, munis bounced back slightly, with yields declining about three or four basis points, following Treasuries.
The 20-bond and 11-bond GO indexes both rose 12 basis points this week, to 4.77% and 4.68%, respectively. These are their highest levels since June 26, when they were 4.83% and 4.74%, respectively.
The revenue bond index also rose 12 basis points this week, to 5.23%. This is its highest level since June 26, when it was 5.25%.
The 10-year Treasury note yield rose seven basis points, to 4.12%, which is its highest level since June 19, when it was 4.22%.
The 30-year Treasury bond yield rose three basis points, to 4.68%, which is its highest level since June 19, when it was 4.77%.
The one-year note index rose three basis points, to 1.57%, but remained below its 1.62% level from two weeks ago.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.33%, up 18 basis points from last week's 5.15%.
