Municipal bond prices sledded downhill last week, pushing yields on The Bond Buyer's indexes moderately higher, as issuers blanketed the market with new bonds but found few takers.
The 20-bond index of general obligation yields rose three basis points, to 5.36% from 5.33% last week, while the 11-bond index of general obligations also gained three basis points, to 5.26% from 5.23%.
The 30-year revenue bond index rose to 5.62%, up nine basis points from 5.53% last Thursday.
The average yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index, which is composed mainly of revenue bonds, increased eight basis points, to 5.58% from 5.50% last Thursday.
Municipal bonds fared better than long-term U.S. Treasury securities, however, as the 30-year bond yield jumped 16 basis points to 6.30% from 6.14%. That narrowed the MOB spread to negative 392, down from negative 411 a week ago. Wednesday's MOB spread of negative 388 was the smallest since mid-July.
Treasury prices lost ground this week in light trading after being buffeted by reports of increased retail sales and manufacturing production, rising commodity prices, and turmoil in Russia.
The municipal market fell prey to yearend supply and demand pressures this week. Issuers shoveled several billion dollars' worth of bonds into the hopper, including:
* $756 million for the New York State Medical Care Facilities Finance Agency.
* $442 million for the Georgia Municipal Electric Authority.
* $423 million for the District of Columbia.
* $420 million for Dade County, Fla.
* $416 million for the New York State Dormitory Authority.
That surge pushed the 30-day visible supply of negotiated bonds Tuesday to $7.03 billion - only the fourth time this year that the negotiated supply has topped $7 billion.
Yesterday, after most of the week's big issues had been sold, the negotiated supply was down to $3.43 billion.
At the same time, however, the investors who had spurred the previous week's rally suddenly became reluctant to buy, even when tempted with lower bond prices.
One result was a buildup in dealers' inventories of unsold bonds, as measured by Standard & Poor's Corp.'s The Blue List. After reaching a three-month low of $1.17 billion last Wednesday, The Blue List rose steadily throughout the week and hit $1.78 billion yesterday, its highest level since just before Thanksgiving.
The short end also saw an end to its recent rally, with the one-year note index rising five basis points, to 2.30% from its record low of 2.25% last Wednesday. The index has been compiled since July 1989.