Nearly all of The Bond Buyer's weekly yield indexes increased this holiday-shortened week, as the municipal market mostly cheapened.
"There's been some arcing to the curve there this week," said Evan Rourke, portfolio manager at Eaton Vance. "The short end has been holding in, but the long end is off a bit. Nothing huge, just dealers cleaning up stale inventory."
After a largely unchanged Friday, the muni market closed Monday in observance of Presidents Day. Following that, tax-exempts were unchanged to weaker in each of the subsequent three sessions, with losses increasing mildly with each session.
In the primary market this week, the bulk of the issuance was concentrated yesterday, when more than $3 billion of debt came in two large transactions.
The Los Angeles Unified School District came to market with the week's biggest deal, pricing $1.74 billion of taxable and tax-exempt general obligation debt, including $1.25 billion of taxable Build America Bonds. The remaining $491.6 million was priced as tax-exempts. Also, Illinois sold $1.5 billion of tax-exempt GOs.
In other activity, the Federal Reserve yesterday raised the discount rate to 0.75% from 0.5%, effective today.
The Bond Buyer 20-bond index of 20-year GO yields rose four basis points this week to 4.38%, which is the highest level for the index since Jan. 28, when it was 4.39%.
The 11-bond index of higher-grade 20-year GO yields increased three basis points this week to 4.09%. This is the highest the index has been since Jan. 28, when it was 4.10%.
The revenue bond index, which measures 30-year revenue bond yields, rose one basis point this week to 4.97%, the highest the index has been since Jan. 28, when it was 4.99%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose three basis point this week to 0.48%, the highest level for the index since Jan. 28, when it was 0.49%.
The yield on the 10-year Treasury note rose seven basis points this week to 3.80%, which is the highest the yield has been since Jan. 7, when it was 3.83%.
The yield on the 30-year Treasury bond increased six basis points this week to 4.74%, its highest level since June 19, 2008, when it was 4.77%.
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 5.31%, down one basis point from last week's 5.32%.
