Muni Yields Fall to Five-Week Low
Municipal Yields Fall to Five-Week Low on Demand for Safety
Richard Drew/AP
A specialisgt works at his post on the floor of the New York Stock Exchange on Nov. 9, 2011.
A specialisgt works at his post on the floor of the New York Stock Exchange on Nov. 9, 2011. Photographer: Richard Drew/AP
Municipal bonds rallied, pushing yields to a five-week low, as investors sought safety in U.S. Treasuries amid concern that European governments won’t make spending cuts to avoid bond defaults.
The yield on benchmark 10-year tax-exempt bonds dropped to 2.26 percent at noon in New York from 2.3 yesterday, according to a Bloomberg Valuation Index. It’s the lowest since Oct. 5, when yields touched 2.2 percent. Yields on Treasuries with similar maturity dropped the most in a week, to 1.98 percent.
“A good amount is due to the pick-up in Treasuries,” Jason Hannon, a trader at New York-based Arbor Research & Trading Inc., said in a telephone interview.
U.S. government debt rose as borrowing costs soared in Italy amid uncertainty the country and Greece will implement austerity measures considered necessary to head off bond defaults.
Ten-year municipals yielded 110.0 percent of comparable Treasury yields yesterday, down from 113.9 percent the previous day. The ratio, used to gauge relative value of two bonds, has been below 100 percent only once since Aug. 29, the longest such stretch since 2009.
To contact the reporter on this story: Andrea Riquier in New York at ariquier@bloomberg.net.
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
Rate this Page