The Bond Buyer's municipal bond indexes rose for the fifth consecutive week, putting yields at the highest levels since 1992 as fixed-income markets continued to be buffeted by reports of solid economic growth and anticipation of today's employment figures.
The 30-year revenue bond index jumped 12 basis points, to 6.82% yesterday from 6.70% a week ago. This is the highest level for the 30-bond barometer since April 30, 1992, when the index read 6.82%.
The 20-bond and 11-bond indexes of general obligation yields each rose seven basis points. The 20-bond index rose to 6.50% from 6.43%, and the 11-bond index rose to 6.41% from 6.34% last
Thursday. That was the highest point either index has reached since Nov. 5, 1992, when the 20-bond index was 6.51% and the 11-bond index was 6.42%. An acute shortage of GO bonds in the market appears to have kept losses in that sector below those in revenue bonds.
During the five-week advance, the revenue bond index tacked on 39 basis points and is now 133 basis points above its 1994 low of 5.49% on Feb. 3. The 20-bond index has added 34 basis points since Sept. 1, and is now 125 basis points above its 1994 low of 5.25% on Feb. 3. The 11-bond index has gained 32 basis points since Sept. 1 and also stands 125 basis points above its 1994 low of 5.16% on Feb. 3.
The average yield to maturity of the 40 bonds used in calculating the daily MUnicipal Bond Index -- most of them revenue bonds rose 13 basis points, to6,70% yesterday from 6.57% last Thursday. The yield on the Municipal Bond Index is now the highest since Oct. 29, 1992, when it was also 6.70%. The index has jumped 127 basis points since Feb. 3, when it reached this year's low of 5.43%.
Long-term U.S. government securities outperformed the municipal revenue market, although they slipped slightly more than tax-exempt GOs. The yield on the bellwether 30-year Treasury bond rose nine basis points on the week; to 7.94% yesterday from 7.85% last Thursday. The 30-year bond yield has risen 40 basis points since Sept. 1 and stands 160 basis points above its Jan. 27 low of 6.25%.
Bond prices headed downward throughout the week, as one economic report after another indicated an economy recovering too quickly for the fixed-inCome markets' comfort. Rapid economic growth puts pressure on the Federal Reserve Board to raise interest rates to keep price inflation down.
Prices dropped 1/8 to 1/4 point Monday after the National Association of Purchasing Managers reported that its manufacturing index rose 2.0 points in September. Prices declined 1/4 to a/8 Tuesday, following the Johnson Redbook report on retail sales, although the markets generally ignored a 0.6% jump in the index of leading indicators.
And prices plunged 3/4 to one point Wednesday after the Commerce Department reported that orders for manufactured goods jumped 4.4% in August, well above the consensus expectation. Prices were mostly unchanged yesterday, despite a larger-than-expected increase in the weekly report on initial claims for unemployment benefits. The inertia was attributed to the markets' preoccupation with today's monthly employment report.
In the short end, The Bond Buyer's one-year note index rose four basis points this week, to 4.14% on Wednesday from 4.10% last Wednesday. The note index is now at the highest level since July 20, when it was 4.15%.