The Bond Buyer's indexes barely budged this week as the municipal market adopted a wait-and-see attitude that brought last week's good vibrations to and abrupt halt.
The 20-bond index of general obligation yields slipped one basis point, to 6.13% yesterday from 6.14% a week ago. The 11-bond index was unchanged at 6.04%. The revenue index also was unchanged at 6.4%.
The average yield to maturity of the 40 bonds used in the daily Municipal Bond Index, which is comprised mainly of revenue bonds, rose two basis points, to 6.36% yesterday from 6.34% the previous Thursday.
After the indexes fell last Thursday to their lowest levels since March 30 on the Federal Reserve Board tightening, the tax-exempt market was content simply to follow Treasuries. The government market, however, took a drubbing this week on inflation fears and a poorly received two-year note auction.
On Monday, the Commodity Research Bureau's (CRB) index roared to its largest one-day gain since last summer, rising 4.67 points to 238.36. That hammered the price of the Treasury's bellwether 30-year bond down by 1 11/32 to a closing yield of 7.44%. The surge in commodity prices, government market analysts said, showed that the bear market in interest rates is still a formidable force, even if the Fed is not expected to raise rates again any time soon.
The yield on the Treasury's bellwether 30-year bond jumped 13 basis points to 7.36% yesterday from 7.23% last Thursday.
On Tuesday, the CRB eased again and tax-exempts settled into an up-again, down again neutral mode.
"We've settled into a range," a bond market analyst said. "About the only truly positive things going on for municipals right now is the lack of primary issuance. The market turned a little bullish when the CRB started falling again, and retail is getting involved."
The Bond Buyer's 30-day visible supply stood at $3.61 million yesterday, a decline of $100 million from $3.71 billion a week earlier. That is the 30-day's lowest level since $3.15 billion on March 3.
The measure of future supply has now been below $4 billion for six straight business days and below $5 billion for 10 consecutive days. In fact, so far in 1994, the 30-day visible supply has been under $5 billion on 48 business days.
The Bond Buyer's one-year note index declined five basis points during the period, to 3.72% on Wednesday from 3.77% the previous Wednesday.