NEW YORK (Dow Jones)--Municipal bonds ran into a rare headwind Tuesday, with prices falling and yields rising across most maturities as long-awaited new supply hit the market.
On average, 10-year triple-A yields rose to 2.60%, the first increase since Aug. 25, according to Municipal Market Data. Yields had fallen without exception since that date, thanks to a scarcity of new issues.
Starved for new tax-exempt debt, investors had been bidding up existing bonds, but a slew of new issues Tuesday led by California finally satiated demand.
Triple-A bonds due in 2039 now yield 3.85%, up 0.04 percentage point from Monday.
Takeway: Unless you need the income each month, keep your finger on the trigger and be wary of interest rates rising.