The Bond Buyer’s weekly yield indexes declined this week as the municipal market grew firmer, though it lagged a more substantial rally in the Treasury market.
“The obvious factor influencing the market is the financial situation overseas, particularly in Europe. You are going to have a continued pressure on the euro, which obviously will have an effect on the dollar and on the stock market here,” said Howard Mackey, president of the broker-dealer division of Rice Financial Products.
“And that’s why you have a decline in the stock market today, which has had a positive effect on our Treasury market. The muni market tends to lag, but I think we will catch up.”
“You also have June coupon payments coming in,” Mackey added. “We will have a lot of tax-exempt cash become available which will put continued downward pressure on municipal tax-exempt interest rates.”
The Bond Buyer 20-bond index of 20-year general obligation bond yields declined five basis points this week to 4.27%. That is the lowest level for the index since Dec. 30, 2009, when it was 4.25%.
The 11-bond index of higher-grade 20-year GO yields fell four basis points this week to 4.00% — the same level as two weeks ago and the lowest since Dec. 30, 2009, when it was 3.97%.
The revenue bond index, which measures 30-year revenue bond yields, declined four basis points this week to 4.86%. That is the lowest the index has been since Oct. 15, 2009, when it was also 4.86%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, fell three basis points this week to 0.49%, the lowest level since April 14, when it was 0.48%.
The yield on the 10-year Treasury note dropped 29 basis points this week to 3.26%, which is the lowest the yield has been since Oct. 8, 2009, when it was 3.24%,
The yield on the 30-year Treasury bond plunged 31 basis points this week to 4.14%. That is the lowest yield for the 30-year bond since Oct. 8, 2009, when it was 4.08%.
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 5.09%, down one basis point from last week.
Priti Patnaik contributed to this column.