Yield Indexes Climb Amid Weaker Tone in Holiday-Shortened Week

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The Bond Buyer's weekly yield indexes rose last week as a weaker tone permeated the municipal market throughout the holiday-shortened set.

"We're really in holiday mode now," said Evan Rourke, portfolio manager at Eaton Vance. "There's very little going on. Treasuries have been giving up pretty good ground, but munis not so much.

"There has been significant outperformance, because Treasuries had a really weak patch," he continued. "There's been a kind of pre-holiday lack of selling. If you're a muni holder, there's tremendous pressure to sell. Up until [Tuesday] though, if you had high-quality bonds, there was still a pretty strong bid. But [Wednesday], everything has just disappeared."

In the quiet new-issue market last week, New York's Liberty Development Corp. priced $2.581 billion of escrow bonds to meet a year-end deadline to sell Liberty bonds for redevelopment of the World Trade Center site. Goldman, Sachs & Co. priced the issue Tuesday.

Also last week, Raymond James & Co. priced $157.9 million of marine terminal revenue bonds for the South Jersey Port Corp., including $129.7 million of taxable Build America Bonds.

The Bond Buyer 20-bond index of 20-year general obligation bond yields rose three basis points this week to 4.21%. That is the highest level for the index since Dec. 3, when it was 4.24%.

The 11-bond index of higher-grade 20-year GO yields also increased three basis points this week, to 3.93%, which is the highest it has been since Dec. 3, when it was 3.97%.

The revenue bond index, which measures 30-year revenue bond yields, gained two basis points this week to 4.94%. That is the highest level for the index since Dec. 3, when it was 4.98%.

The yield on the 10-year Treasury note jumped 27 basis points this week to 3.76%, which is the highest it has been since Aug. 6, when it was also 3.76%.

The yield on the 30-year Treasury bond rose 20 basis points this week to 4.62%, which is the highest it has been since June 18, when it was 4.63%.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose three basis points this week to 0.49%, which is the same level it reached two weeks ago.

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, rose two basis points this week to 5.40%. That is the highest level for the weekly average yield since the week ended Dec. 3, when it was 5.43%.

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