By Hal M. Bundrick
NEW YORK (
)--The bond market is in a state of transition and record transactions are signaling rapid movement by investors. An all-time one-day record of 11,590 municipal bond trades was noted this week by BondDesk ATS, a retail trading platform.
The record-setting trading day followed the largest three-day increase in muni yields since April 1987.
John Bagley, President of BondDesk Trading, says that interest in municipal bonds from retail investors has spiked over the past week, along with the increase in yields.
"The municipal bond market has seen exceptionally large selling from institutions since the Fed meeting last Wednesday," says Bagley. "This week, individual investors provided support for the market and drove yields down across the board by buying bonds at unprecedented levels. This buying was driven by an ability to buy 5.00% coupon bonds at par on a wide variety of quality municipal credits."
The month-to-date fill rate for municipal bond orders placed against firm bids on the trading platform has been 98.8%, in spite of the market volatility during the month, Bagley said.
"While Bid Wanteds on our platform are nearing historically high levels above 10,000 per day, a sign of major selling pressure, there were almost five investor buys for every sell this past week, indicating that retail investors are jumping into the market to take advantage of higher rates," he added.
Looming tax proposals that may affect the taxation of muni bonds, as well as municipal bankruptcies in California last year and further worries with steep revenue declines in Detroit have caused some anxiety in the muni market, long considered a safe-haven for conservative investors.
--Written by Hal M. Bundrick