Markets were in for several volatile trading sessions this week as investors digested a slew of mixed economic reports and the minutes from the last FOMC meeting. The Fed announced that it will continue its aggressive stimulus measures, purchasing $85 billion a month of mortgage-backed and Treasury securities, as they feel the domestic economy is still too far away from standing on its own two feet. The minutes also showed that policymakers remain divided on the central bank s exit strategy, leaving many speculating whether or not the Fed will scale back or completely end its stimulus measures earlier than expected.
In the fixed income space, U.S. Treasuries took on their safe haven appeal for the first time in weeks as bond traders digested the implications of the Fed's latest policy commentary. Meanwhile, yields on 10-year municipal bonds rose to the highest level in six months on Wednesday, as Washington continues its budget talks before the automatic round of spending cuts kicks in on March 1st.
Weekly Overview:
Date | Total Trades | Dollar Volume | $1m+ Trades | S&P National Muni Bond Fund (MUB) Performance |
---|---|---|---|---|
Tuesday 02/19/2013 | 40,937 | $4,158,489,944 | 968 | -0.04% |
Wednesday 02/20/2013 | 37,976 | $4,715,403,543 | 1050 | 0.03% |
Thursday 02/21/2013 | 41,706 | $5,413,808,697 | 1249 | 0.13% |
Friday 02/22/2013 | 42,285 | $6,361,555,967 | 1698 | -0.03% |
The municipal bond market had a relatively active week, with trading volumes peaking on Friday. The iShares S&P National Municipal Bond Fund (MUB), which seeks to measure the performance of the investment grade segment of the U.S. muni bond market, traded in a narrow range throughout the week, only managing to post positive returns on Wednesday and Friday [see more Market Activity].
Most Active Issues This Week
- AMBRIDGE BOROUGH PENNSYLVANIA MUNICIPAL AUTHORITY SEWER (023335DP4): This issue exchanged hands 83 times on Tuesday with an average dollar volume coming in at $4,915,000.
- PUERTO RICO COMMONWEALTH REFUNDING PUBLIC IMPROVEMENT SERIES A (74514LD20): This issue's dollar volume topped $7,400,000 as investors traded the bond about 70 times on Wednesday and Thursday.
- NEW YORK NEW YORK CITY MUNICIPAL WATER FINANCE 2ND GENERAL FISCAL 2013 SERIES CC (64972GBN3): This issue exchanged hands 284 times on Friday with an average dollar volume coming in at over $101,325,000, making it the most active issue this week.
Highest Yielding Issues This Week
- ILLINOIS ST TAXABLE-PENSION (452151LF8): This issue clocked in an average yield of 5.17% on Tuesday.
- PUERTO RICO COMMONWEALTH REFUNDING PUBLIC IMPROVEMENT SERIES A (74514LB89): This issue boasted the highest average yield of 5.095% and 5.096% during Wednesday's and Thursday's sessions, respectively.
- NEW YORK NEW YORK CITY MUNICIPAL WATER FINANCE 2ND GENERAL FISCAL 2013 SERIES CC (64972GBN3): This issue logged in an average yield of 3.849% on Friday.
3 Articles Municipal Bond Investors Must Read
- Municipal Bond Safety Questioned at MarketWatch
- Muni Bond Manager's Journal: Coupon Power Compounded at Forbes
- Buffett's Berkshire Returns to Once-Shunned Muni Market at Bloomberg