Most of The Bond Buyer’s yield indexes declined this week, as municipals showed firmness in nearly all the week’s sessions.
“It’s been a one-way train,” said Michael Pietronico, chief executive officer at Miller Tabak Asset Management.
“The technicals are strong, we’re still talking about a reinvestment period that’s substantial, there’s plenty of cash on the sidelines, and cash equivalent yields are too small to be even considered for many. So those who need income need to buy bonds, and obviously they are spending their money on munis.
“It seems that the perception is that the new-issue market will be met with more demand, and if anything, the more supply is proving that the appetite for bonds is higher than many thought at these yield levels,” Pietronico continued.
“So it’s probably going to remain quite firm until either a negative credit event occurs, or the economy lifts off and stocks become more of an alternative to bonds.”
Activity in the secondary market remained quiet for much of the week, as attention shifted to the primary market, which saw good demand for new issues in a week free of Build America Bond transactions.
The Bond Buyer 20-bond index of 20-year general obligation bond yields declined 10 basis points this week to 4.44%. This is the lowest the index has been since Feb. 7, 2008, when it was 4.33%.
The 11-bond index of higher-grade 20-year GO yields declined 11 basis points this week to 4.18%, which is the lowest level for the index since Jan. 17, 2008, when it was 4.08%.
The revenue bond index, which measures 30-year revenue bond yields, dropped four basis points this week to 5.42%, which is the lowest the index has been since Sept. 11, 2008, when it was 5.09%.
The 10-year U.S. Treasury note yield rose 25 basis points this week to 3.36%, which is the highest the yield has been since Nov. 13, 2008, when it was 3.86%.
The 30-year U.S. Treasury bond yield jumped 24 basis points higher this week to 4.31%. This is the highest the bond’s yield has been since Nov. 13, 2008, when it was 4.34%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose 15 basis points this week to 0.74%, which is the highest level since March 25, when it was 0.79%.
The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.25%, down five basis points from last week’s level of 5.30%.