Municipals, Treasurys Rally as Market Goes Back to Work
Municipal bond traders returned to work on Thursday as the market took up where it left off on Tuesday — with muni and Treasury yields falling.
The fixed-income markets were closed on Wednesday for the national day of mourning honoring former President George H.W. Bush.
Municipal bonds were stronger, according to a midday read of the MBIS benchmark scale.
Benchmark muni yields fell as much as six basis points in the one- to 30-year maturities.
High-grade munis were stronger, with yields calculated on MBIS' AAA scale decreasing as much as six basis points across the curve.
Municipals were stronger on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and on the 30-year muni maturity falling two to four basis points.
Treasury bonds were stronger.
The Treasury 30-year yield was at
10-year stood at 2.850%, the five-year was at 2.725%, the two-year was at
2.734% while the Treasury three-month bill stood at 2.414%.
On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 83.2% while the 30-year muni-to-Treasury ratio stood at 98.7%, according to MMD.
The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/ Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Long-term tax-exempt municipal bond funds saw an outflow of $896 million in the week ended Nov. 28, the Investment Company Institute reported Wednesday.
This followed an outflow of $578 million in the week ended Nov. 20 and outflows of $770 million, $909 million, $1.196 billion, $179 million, $1.310 billion, and $1.653 billion in the previous six weeks.
Taxable bond funds saw an estimated outflow of $2.636 billion in the latest reporting week, after seeing outflows of $3.220 billion and $1.543 billion in the previous two weeks.
ICI said the total estimated outflows to long-term mutual funds and exchange-traded funds were $13.268 billion after outflows of $6.693 billion and $34 million in the prior two weeks.
Bank of America Merrill Lynch received the official award on the San Francisco Bay Area Toll Authority’s $402.11 million of toll bridge revenue bonds consisting of Series 2018A term rate, Series 2018B term-rate and Series 2018C SIFMA index-rate bonds.
The deal is rated Aa3 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.
RBC Capital Markets received the official award on the Maricopa County Industrial Development Authority, Ariz.’s $291.38 million of hospital revenue bonds.
Bank of America Merrill Lynch priced the Delaware River Port Authority, Pa.’s $714.1 million of Series 2018 revenue bonds. The deal is rated A2 by Moody’s Investors Service and A-plus by S&P Global. ◽