The Bond Buyer's municipal bond indexes posted lower yields this week for the second straight week, as attractive yields finally began to pull investors back to the market.
The 20-bond and 11-bond indexes of general obligation yields fell 13 basis points, to 6.90% and 6.79%, respectively, from 7.03% and 6.92% on Nov. 23.
The 30-year revenue bond index declined 14 basis points, to 7.18% yesterday from 7.32% on Nov. 23.
The weekly indexes are back down to their lowest levels since Nov.3, when the 20-bond was 6.83%, the 11-bond was 6.72%, and the revenue bond was 7.16%.
The indexes were calculated a day earlier than usual last week because of the Thanksgiving holiday.
The average yield to maturity of the 40 bonds used in calculating the daily Municipal Bond Index dropped 18 basis points on the week, to 7.11% yesterday from 7.29% last week.
The municipal market was barely open for business last Friday, following the Thanksgiving holiday, and not much more active on Monday. On Tuesday, however, bond prices got a boost when three new state GO issues got a rousing welcome from buyers at property and casualty insurance companies.
The big surge came Wednesday, when prices jumped 3/4 point despite several reports indicating healthy economic growth. Prices continued to rise yesterday, with dollar bonds posting gains of 1/4 to 3/8 point on average and up to one point in spots.
Traders said investors apparently have decided that municipals are a good investment at current yields. An ongoing shift of funds out of stocks and into bonds also continues to help bond prices rise, they said.
The short end of the municipal market did not fare as well as the long end this week. The Bond Buyer's one-year note index rose eight basis points, to 4.61% from 4.53% last week. That was the highest level since Oct. 23, 1991, when the index was 4.70%.
U.S. government securities did not enjoy the same rally that municipals did this week. The yield on the bellwether 30-year Treasury bond gained six basis points, to 8.00% from 7.94% on Nov. 23.