The municipal bond market ignored indications of a stronger economy and spent the final week of 1993 drifting within a tight, generally positive range, pushing yields on The Bond Buyer's weekly indexes down modestly from a week ago.
Yields on the 20-bond and 11-bond indexes of general obligation bonds both declined six basis points, to 5.28% and 5.19%, respectively, from 5.34% and 5.25% last Wednesday.
The 30-year revenue bond index was also down six basis points on the week, to 5.52% from 5.58% last Wednesday.
The three weekly indexes have not been that low since Oct. 21, when the 20-bond index was 5.20%, the 11-bond index was 5.10%, and the revenue index was 5.44%.
The average yield to maturity of the 40 bonds used to calculate the daily Municipal Bond index, which is composed mainly of revenue bonds, was down four basis points, to 5.50% from 5.54% last Wednesday.
The government market fared worse in the waning days of 1993, with the yield on the 30-year bond rising three basis points, to 6.24% from 6.21% last Wednesday.
Municipal bond prices kept a positive tone throughout a week of lackluster trading despite a flurry of economic indicators that pointed toward a strengthening economy. On Tuesday, the Conference Board reported that the consumer confidence index bolted to 80.2% in December, the highest level of the year, from a revised 71.9% in November. The index has gained 20 points since October.
That was followed on Wednesday by the Commerce Department's report that the index of leading economic indicators rose 0.5% in November, the fourth consecutive monthly advance and slightly higher than the consensus forecast of 0.4%. The National Association of Realtors reported the same day that existing home sales grew 2.9% in November, to a seasonally adjusted 4.21 million units.
But tax-exempts were able to shrug off those reports and keep moving higher, as participants kept an eye on next month.
"People have been anticipating a flow of new money into the market in January, with a consensus estimate of $30 billion in coupons, redemptions, and calls," a market analyst said. "The market expects only half of that has been pre-invested, which still leaves a lot of money to chase bonds.
"The light calendar has allowed the market to focus on the secondary, allowing traders to bid yields lower to maintain their positions," the analyst concluded.
Standard & Poor's Corp.'s The Blue List has fallen for five consecutive business days, to $1.63 billion yesterday from $2.03 billion on Dec. 21. At the same time, The Bond Buyer's 30-day visible, supply fell to $3.07 billion on Wednesday from $3.81 billion on Dec. 21. The measure of future supply had slipped as low as $2.58 billion on Dec. 23. In the past two weeks, sales of new-issue notes and bonds totaled $2.82 billion.
This year, The Bond Buyer indexes hit their lowest levels in nearly 20 years. The 5.20% that the 20-bond hit on Oct. 14 was its lowest since Feb. 14, 1974, when it was at 5.18%. The 11-bond, which hit 5.10% on Oct. 21, was at its lowest yield since Feb. 21, 1974, when it was 5.09%.
Also on Oct. 14, the revenue bond index was down to 5.41%, an all-time low. The Bond Buyer began calculating the index in September of 1979. And on Oct. 15, the yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index reached an all-time low of 5.34%.
This week, the short end moved in the opposite direction of long-term bonds, with the one-year note index rising two basis points, to 2.30% from 2.28% last Wednesday.
The long-term indexes were calculated one day earlier than usual this week. The Bond Buyer will not be published Friday because of the New Year's holiday.
