The Bond Buyer’s weekly yield indexes rose this week, as tax-exempt bond prices fell for most of the period despite a mild recovery in tone over the past two sessions.
“We have had a fairly precipitous weakening and a deterioration over the past week,” said Howard Mackey, president of the broker-dealer division of Rice Financial Products. “It started towards the latter part of the last week and we had a couple of fairly big down days and kind of continued to drift during this week.”
The primary factor for this drop is that there has been some positive news coming into the market from the European economy,” he said. “The pressure drifted away from our taxable market. So the flight-to-quality issues somewhat dissipated.”
“With new issuance, there has been somewhat of a pall in the muni market,” Mackey said. “The BABs really had a tough time in the market in terms of getting decent pricing, getting good distribution. Because we haven’t seen much issuance beyond the 10- to 15-year range, you kind of tend to get a glut in the market place, in terms of bonds clustering in these maturity ranges. There is a lot of long paper.”
The Bond Buyer 20-bond index of 20-year general obligation bond yields rose three basis points this week to 4.40%. This is the highest level for the index since April 15, when it was 4.43%.
The 11-bond index of higher-grade 20-year GO yields also gained three basis points this week, to 4.12%, which is its highest level since April 15, when it was 4.14%.
The revenue bond index, which measures 30-year revenue bond yields, increased four basis point this week to 4.86%. This is its highest level since May 20, when it was also 4.86%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, rose five basis points this week to 0.57%, its highest level since Oct. 14, 2009, when it was also 0.57%.
The yield on the 10-year Treasury note declined 12 basis points this week to 3.20%, which is its lowest level since Oct. 1, when it was also 3.20%.
The yield on the 30-year Treasury bond 11 basis points fell this week to 4.13%, which is its lowest level 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 5.15%, up five basis points from last week’s 5.10%.
Priti Patnaik contributed to this column.