Yields on The Bond Buyer's indexes posted modest increases this week, ending a four-week price rally as the market absorbed a heavy slate of refundings.
The 20-bond index of general obligation bonds rose two basis points, to 6.28% from 6.26% last Wednesday. The 11-bond GO index increased three basis points, to 6.19% from 6.16%.
The 30-year revenue bond index edged up one basis point, to 6.48% from 6.47% last week.
The daily Municipal Bond Index's average yield to maturity was also up one basis point, to 6.41% from 6.40% last Wednesday.
Tax-exempt prices moved in conjunction with U.S. government securities as the bellwether 30-year Treasury bond's yield rose two basis points, to 7.55% from 7.53%.
"The reason for the uptick is primarily because the market had a pretty hefty refunding calendar this week," a market analyst said. "There's also the threat of some big refunding paper coming to the market before yearend. And with some key deals in the wing, it's been keeping the market cautious."
As of yesterday, The Bond Buyer's 30-day visible supply was $4.11 billion, down $1.65 billion from last Friday's $5.76 billion. The negotiated component totaled $3.05 billion, of which $1.92 billion are refundings. That number does not include the $1.02 billion of negotiated refundings awarded yesterday.
The market was able to ignore government data that showed a strengthening but still sluggish economy. On Monday, the Purchasing Management Association of Chicago said its Chicagoland Business barometer increased to 54.2% in November on a seasonally adjusted basis from 49.7% in October. A reading below 50% signals a slowing economy, while one above 50% suggests expansion.
On Tuesday, the index of leading U.S. economic indicators rose 0.4% in October, the largest gain in five months, the Commerce Department reported. The increase followed a revised 0.1% decline in September, previously reported as a 0.3% decline, and a 0.3% drop in. August.
"In addition, the market lacked direction this week ahead of [today's] unemployment data," the analyst said.
Initial claims for state unemployment benefits fell 12,000 for the week ended Nov. 21, to a seasonally adjusted 362,000, the Labor Department reported yesterday. It was the seventh decline in the past nine weeks.
The Bond Buyer's one-year note index plunged to a record low of 2.56%, down 28 basis points from 2.84% a week ago. The previous low was 2.76%, set on Oct. 7.
"There's just been a tremendous demand," a note trader said. "We've had cash coming in from the Dec. 1 bond interest payments."
"People are also positioning themselves for the $9 billion in redemptions coming Jan. l1" the trader added. "But I don't anticipate [yields) staying this low."