Yields on The Bond Buyer's weekly bond indexes posted modest declines this week, as favorable economic data, a reduction in new issuance, and preholiday doldrums helped to give the market a firmer tone.
The 20-bond index of general obligation yields decreased seven basts points, to 6.24% from 6.31 % last week, while the 11-bond general obligation index declined six basts points, to 6.28% from 6.22% a week ago. The 30-year revenue bond index was down seven basis points, to 6.38% from 6.45% last week.
The daily Municipal Bond Index's average yield to maturity fell six basis points, to 6.30% from 6.36%. from Aug. 27. U.S. Treasury bond prices put on a similar performance, as the 30-year government bond's yield declined four basis points, to 7.36% from 7.40%, from Aug. 27.
In the four previous weeks, the two GO indexes had risen 42 basts points apiece, from 5.89% and 5.80%, respectively, on July 30. The revenue bond index had gained 33 basis points in the same period and the yield to maturity jumped 24 basts points since July 29, when it reached a record low of 6.12%.
The sharp increases were attributed primarily to a falling dollar and heavy new-issue supply.
The market began recovering this week, despite continued weakness in the dollar, and focused more on economic data released in the last few days.
On Monday, the Commerce Department reported that July's sale of new single-family homes fell 2.6%. The National Association of Purchasing Management said its Chicagoland business barometer decreased to 58.4% in August, on a seasonally adjusted basis, from 5&2% in July.
The tax-exempt market continued improving on Tuesday, getting a boost when it was reported that the purchasing managers' index fell to 53.7% in August from 54.2% in July.
At that point, the bond prices had improved for four consecutive days and had a decidedly firmer tone. However, traders said the market was still vulnerable.
"The market seems better, but there's not real depth to it," one trader said. "We all know the shadow calendar is impressive and the Street needs this week to recover. One bad deal could cause the market to collapse. "
By Wednesday, municipal market participants were focusing on today's release for August's unemployment data, and trading was light. One trader described activity "like chasing your own shadow. Every time you try to buy something at yesterday's offering, they bump up the price. You can't get much accomplished."
"Basically nobody's doing anything," the head of a Treasury trading desk saw.
Traders dismissed yesterday's small increase in initial jobless claims, chain store sales figures, and Ford and General Motors reports that late-august sales were much weaker than expected.
Economists surveyed by The Bond Buyer on average expect a 175,000 increase in August payrolls, but attribute about 100,000 of those new jobs to the federally funded summer jobs program for teenagers.
In the short-term sector, The Bond Buyer's one-year note index was up eight basis points, to 3.21 % from last week's 3.13%.