Municipal bond yields ticked down Friday morning after spending a week losing gains from a month-long rally.
Yields on bonds maturing from 2039 to 2044 lost as much as two basis points, according to Municipal Market Data's AAA scale, while those maturing from 2015 to 2019 were steady.
Friday also marked the day that Standard & Poor's Dow Jones Indices said it would remove Puerto Rico bonds from its S&P National AMT-Free Municipal Bond Index, saying the bonds are now trading at high-yield corporate levels.
"Puerto Rico municipal bonds also are experiencing varying degrees of liquidity in the secondary market," SPDJI said in a statement Thursday. "As a result, Puerto Rico municipal bonds no longer meet the objective established by this investable investment grade index."
The average yield of bonds in the S&P Municipal Bond Puerto Rico Index has fallen seven basis points to 7.33% so far this year, SPDJI said in its statement. The total year-to-date return is 2.3%, with the lowest yield reaching 7.19% on Jan. 24.
By comparison, investment grade bonds tracked in a separate SPDJI index returned 2.1% so far this year.
Total sales this week reached $4.98 million, according to data from Thomson Reuters. Potential volume next week could reach $4.47 million, according to Ipreo and The Bond Buyer.
Treasuries yields dropped Friday morning, with the 10-year yield down four basis points to 2.66%. The 30-year and 2-year yields slid three basis points each to 3.63% and 0.34%, respectively.
