Munis Finish Firm After Treasury Rally Fizzles

February 2006
Bond Buyer;2/13/2006, Vol. 355 Issue 32218, p2
Trade Publication
The article reports that the municipal bond market finished firm after a post-auction rally in Treasuries fizzled out amid an array of technical factors, including event risk associated with congressional testimony by the new head of the U.S. Federal Reserve. The reintroduction of 30-year Treasury bonds and subsequent sharp drop in the long-term Treasury yield impacted the relative value of municipal bonds, which appeared cheaper versus their taxable counterparts. The author implies that the cheaper municipal bonds are compared to Treasuries, the more desirable they become for arbitrage and crossover buyers.


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