Last week, Treasury and muni yields for all the maturities experienced a downturn, mirroring the fluctuations in oil prices.

There was a notable upgrade to San Mateo-Foster City School District CA’s GO Bond by Moody’s, the details of which are provided below. Also, we provide a quick outlook on Puerto Rico’s bond market performance.

• Treasury yields closed lower for the second consecutive week.

• Two- and five-year muni bond yields were more affected than two- and five-year Treasury yields.

• Janet Yellen emphasized that the Fed’s policy normalization will remain “data dependent.”

• Saudi Arabia and Russia, the world’s top two producers and exporters of crude oil, agreed on February 16 to freeze oil production levels due to persistent lower crude prices.

• Puerto Rico’s House of Representatives passed a bill to restructure its debt.

• While all Treasury yields declined last week across the curve, two- and five-year yields were less impacted in comparison with 10- and 30-year yields.

• Five-, 10- and 30-year yields are already down more than 10 basis points since the start of the month.

• Janet Yellen testified last Wednesday that the Fed is ready for policy normalization but might have to delay its plan due to recent global market turmoil.

• Yellen also stated that the Fed would be cautious with negative interest rates in light of the experiences of other countries. This statement has been the major catalyst for the fluctuations in the fixed-income market.

• The muni bond market rallied last week, outperforming the Treasury yield curve.

• Muni fund flows were at $941 million.

• New issue supply last week totaled $8.5 billion, which was $3 million less than the previous week.

• This week’s new issue calendar is estimated at approximately $5.3 billion due to the shortened week.

• Dominant OPEC power Saudi Arabia and non-OPEC power Russia, the world’s top two producers and exporters of oil, agreed on Tuesday to freeze production levels but said the deal was contingent on others joining in. For example, Iran has been absent from the talks and is determined to raise production levels.

• After winning approval by Puerto Rico’s House of Representatives, the plan to restructure about $9 billion in debt has been moved forward to the desk of Governor Alejandro Garcia Padilla to be signed into law.

Upgrades:

San Mateo-Foster City School District, CA’s GO Bond:

Moody’s Investors Service has assigned an Aaa rating to San Mateo-Foster City School District’s (CA) election of 2015 general obligation bonds, series A, totaling approximately $74 million. The upgrade to Aaa reflects the improvement of the district’s sizeable tax base, the above-average socioeconomic profile of area residents, and the district’s average debt, pension, and OPEB obligations.

Downgrades:

Community College District No. 530, IL’s General Obligation:

Moody’s Investors Service has downgraded Community College District No. 530 (J.A. Logan), IL’s outstanding general obligation unlimited tax (GOULT) rating to A2 from A1 and assigned a negative outlook to it. The downgrade to A2 incorporates the district’s exposure to the State of Illinois (Baa1 negative), given its dependence on state operating aid. The lack of an adopted state budget precludes the distribution of state operating aid.

How to Measure Muni Bond Interest Rate Sensitivity? This article takes a look at how interest rates affect muni bonds and how investors can analyze that risk for both individual bonds and bond funds.