A light calendar and an influx of investor money helped chop down yields on The Bond Buyer's weekly indexes for the first time in six weeks.
The 20-bond and 11-bond indexes of general obligation bond yields both declined three basis points in the week ended Thursday, to 5.46% and 5.35%, respectively, from 5.49% and 5.38% on Nov. 24.
The revenue bond index was down three basis points, to 5.71% from 5.74% the week before.
In the U.S. government securities market, yield on the the 30-year Treasury bond was off four basis points, to 6.26% from 6.30% on Nov. 24.
The average yield to maturity, of the 40 bonds used to calculate the daily Municipal Bond Index, which is comprised mainly of revenue bonds, was unchanged from last Wednesday at 5.66%. The lack of movement in the 40-bond index can be attributed to the twice-monthly revision in the index's list of bonds The latest revision, on Nov. 30. raised the 40 bonds' average coupon rate seven basis points, to 5.35% from 5.28%.
Reflecting the municipal market's cautious, sideways movement, all three indexes are at the same exact point they were at two weeks ago. The weekly indexes have either risen or been unchanged every week since Oct. 14, when the 20-bond was 5.20%.
"An attrition of positions helped firm up yields this week," a market analyst said. "Also, the calendar was light, with less than $2 billion sold this week. The market was also assisted by an inflow of funds from coupons and redemptions and insurance company buying."
The municipal market drew its strength from rallies on two days. On Monday, the market staged a one-day rally on a steep drop in oil and other commodity prices. Yesterday. tax-exempt prices received a boost from speculation that, as interest rates rise, municipal bonds will suffer less than Treasuries.
The light calendar also helped dealers clean out some inventory. Standard & Poor's The Blue List fell for the sixth consecutive day yesterday, falling to $1.45 billion from $1.82 billion on Nov. 23. Yesterday was the first time that this measure of dealer inventory has been below $1.5 billion since Oct. 19.
On Tuesday, municipal bond prices were hurt by stronger than expected economic indicators, which led to a bearish market attitude on Wednesday.
On Tuesday, the Conference Board reported a larger than expected gain in its consumer confidence index in November, to 71.2% from 59.4% in October. Economists had expected the November index to inch up to only around 60%. Also on Tuesday, the Purchasing Management Association of Chicago reported that its index of business activity rose to 65.3% for October from 57% in September. A reading above 50% indicates expansion in the manufacturing sector.
The short-term market continued to benefit from the uncertainty in the long end. The Bond Buyer'y one-year note index dropped 12 basis points to 2.43% from 2.55% on Nov. 24 That was the fifth straight decline in the one-year index. It is now at the lowest level since March 10, when it was 2.39%.