Continued light forward supply and aggressive pricing in the primary market helped push yields on The Bond Buyer's indexes lower from a week ago.
The 20-bond index of general obligation bond yields declined five basis points to 6.16% yesterday from 6.21% a week ago. The 11-bond GO index decreased four basis points to 6.09% from 6.13% last Thursday. The 30.year index of 25 revenue bonds was down three basis points to 6.43% from a week earlier.
The average yield to maturity of the 40 bonds used in the Municipal Bond Index, which comprises mainly revenue bonds, was down six basis points to 6.34% from 6.40% the previous Thursday.
Treasuries outperformed tax-exempts this week, as the yield on the bellwether 30-year. Treasury bond fell nine basis points to 7.45% from 7.54% a week ago.
Municipals began the week like many other weeks over the past two months little changed from a week ago. The 20-bond index is at the same yield as it was Aug. 4. However, continued lack of forward supply helped stimulate some dealers into more aggressive pricing on new issues.
"Generally speaking, it's been the light forward calendar that's been the primary impetus. for the market's improvement," a bond analyst said.
The Bond Buyer's 30-day visible supply totals $t .6 billion, down $860 million from a week ago and its lowest level since the $993 million recorded on Dec. 30, 1991.
By Wednesday's session, market watchers and players were saying that "new deals have been coming in a trifle rich," as another analyst put it.
"There are also expectations of a decent September reinvestment period," the analyst continued, "and players are becoming more comfortable with the idea that the Federal Reserve Board won't be doing any more tightening until late this year. That in turn should encourage retail to extend out on the curve."
While many of the recent economic figures indicate that the economy is toning down and have been, virtually ignored by the marrkets, today's nonfarm payrolls could have a direct effect on trading direction.
"A high payroll number could push the market down, but it won't be much because the market is anticipating a large number," a trader said. "Anything below a 200,000 to 250,000 increase could test recent highs. And if it's as low as 150,000, you'll see the market rally one and a half points."
Another trader said: "There's not a lot of activity, but there's a decent bid side. Barring anything crazy [regarding economic data], it doesn't look like conditions will change much"
On the short end, The Bond Buyer's one-year note index declined four basis points to 4.01% on Wednesday from 4.05% a week earlier. That matches the level posted on Aug. 10.