General Obligation Bond Indexes Decline For 11th Week, Longest Slide Since 1953
The Bond Buyer's yield indexes for general obligation bonds posted modest declines for the 11th consecutive week, marking the longest string of declines in the weekly indexes in nearly 40 years.
The 20-bond and 11-bond GO indexes both dipped one basis point, to 6.85% from 6.86% and to 6.72% from 6.73%, respectively. The two indexes are at their lowest levels since Feb. 14, when the 20-bond was 6.81% and the 11-bond was 6.63%.
This year's 11-week stretch of declines in the GO indexes, which began June 13, is the longest since an 11-week streak for the two indexes that ran from Sept. 10 through Nov. 19 in 1953. This year's streak adds up to a cumulative decline of 34 basis points, or 4.7%, for the 20-bond index and 32 basis points, or 4.5%, for the 11-bond index. In the 1953 streak, the 20-bond index dropped 32 basis points, or 11%, to 2.60% from 34 basis points, or 12.4%, to 2.41% from 2.75%.
The 30-year revenue bond index, which was unchanged last week and thus snapped its string of declines at nine weeks, resumed its decline this week, falling three basis points, to 7.00% from 7.03%. The index has fallen 36 basis points since June 13, and it has not been lower since March 5, 1987, when it reached its all-time low of 6.92%.
The yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index was 6.97%, unchanged from last Thursday. The yield is the lowest since March 6, 1987, when it was at its all-time low of 6.95% (The Bond Buyer began calculating the yield to maturity for the Municipal Bond Index in January 1985).
Prices of all fixed-income securities dropped last Friday by the durable goods report which dimmed hopes that the Fed will ease monetary policy and bring rates down. But municipals have drifted higher ever since, in a market that saw moderate new-issue sales and light trading ahead of the Labor Day holiday, and made up all of Friday's loss by yesterday.
The U.S. government securities market outperformed municipals again this week, with the Treasury's bellwether 30-year bond decreasing six basis points in yield, to 7.98% from 8.04% a week ago.
In the short-term market, The Bond Buyer's one-year note index rose 10 basis points, to 4.87% from 4.77%.