This week started out on shaky footing, as the conflict in Ukraine and the FOMC statement kept investors on the sidelines. After Thursday saw a number of positive economic reports, and investors had time to digest the Fed's comments, markets rebounded and were climbing higher in Friday morning trading. Fed Chairwoman Janet Yellen stated that the Fed would be raising interest rates as soon as the first half of next year when analysts were expecting that the rate hike would not happen until the second half of 2015. Initial jobless claims came in slightly below expectations of 322,000 at 320,000, an increase of 5,000 from last week. On the manufacturing front, the Philadelphia Fed Business Outlook came in at 9, much higher than the 3.2 that was expected; this means that manufacturing general activity, new orders and shipments have bounced back from February's weather-related weakness, posting positive growth. Turning to the bond market, 10-year Treasury yields spiked higher after Janet Yellen's statement this week, ending Thursday at 2.79%. Below, we look at all of Moody's municipal bond upgrades and downgrades from the past week.

Upgrades

• Mount Vernon-Enola School District 41, AR: Moody's upgraded this school district to A2 from A3. The Aa3 enhanced rating reflects Moody's assessment of the Arkansas School District Post-Default Enhancement Program. Credit considerations include the underlying rating of the district, a debt service coverage ratio (DSCR) that exceeds 1.5 times, a stable trend of state aid that is distributed in eleven equal monthly installments, specification that the paying agent notify the Commissioner of Education if a payment is not received when due, and some uncertainty about how quickly and efficiently a default would be cured.
• Northeast Health System, MA: Moody's upgraded this organization to Baa1. The upgrade of Northeast's rating to Baa1 reflects ongoing benefits from the system's merger with Lahey Clinic combined with stable operating performance and balance sheet strengthening at Northeast.
• Spreckels Union School District, CA: Moody's upgraded this school district to Aa3 from A1. The upgrade to Aa3 reflects the district's solid financial position with strong reserve levels that have been maintained at more than 30% of General Fund revenues over the last three fiscal years (2011-2013). The rating additionally incorporates the small tax base size with above average wealth levels, high tax payer concentration and a favorable debt profile characterized by a low debt burden and an above average rate of debt payout.
• Community Hospitals of Central California: Moody's upgraded this organization to Baa1 from Baa2. The upgrade to Baa1 is driven by improving balance sheet ratios, the completion of the vast majority of the organization's large capital plan, the maintenance of adequate operating performance, and the likely receipt of additional provider fee dollars. Undergirding the rating are a number of strong credit fundamentals, including a large revenue base, good market position, and strong clinical services.
• Grady County, GA: Moody's upgraded this county to Aa3 from A1. The upgrade reflects the county's ample fund balance and cash position, which are bolstered by conservative budgeting practices and positive operating trends, and the low debt and pension burdens. The Aa3 rating also incorporates the county's modestly sized tax base with below average socioeconomic factors, which has become less concentrated over the last four years.
• Fair Harbor Fire District, NY: Moody's upgraded this district to Aa3 from A1. The upgrade to Aa3 reflects the district's limited tax base with above average wealth levels, stable financial position, and manageable debt burden.
• Idalou Independent School District, TX: Moody's upgraded this district to A2 from A3. The upgrade to A2 reflects the district's favorable reserve position after positive multi-year operating trends. The rating also incorporates the district's limited tax base, average socioeconomic profile, and elevated debt burden.
• Lee County, GA: Moody's upgraded this county to Aa2 from A1. The upgrade reflects the county's moderately-sized tax base with average socioeconomic factors, ample fund balance and cash positions, which are bolstered by conservative budgeting practices and positive operating trends, and low debt and pension burdens.
• California Department of Water Resources: Moody's upgraded this department to Aa2 from Aa3. The upgrade to Aa2 from Aa3 reflects our view of the improved risk profile of the CA DWR power supply revenue bonds in light of substantially reduced operations coupled with a long history of California Public Utility Commission (CPUC) support of full and timely cost recovery in compliance with the rate agreement that requires the CPUC to annually calculate, revise and impose Bond and Power Charges to ensure adequate funds are available to pay all operating and debt service costs.
• Adel-Desoto-Minburn Community School District, IA: Moody's upgraded this school district to Aa3 from A1. The Aa3 rating reflects the district's modestly-sized but growing tax base favorably located near the Des Moines (rated Aa1/rating under review for potential downgrade) metropolitan area; General Fund reserves experiencing recent growth; and moderately-sized debt burden and unfunded pension liability.
• University of San Diego, CA: Moody's upgraded this university to A1 from A2. The upgrade to A1 is driven by USD's excellent financial management, leading to consistently strong cash flow and debt service. The university's robust operating performance has translated into increasing reserves, with total cash and investment growing by nearly 70% over the past five years. A diversified enrollment base, sound regional reputation, and attractive location contribute to enrollment stability.
• Danville Area School District, PA: Moody's upgraded this school district to Aa3 from A1. The upgrade to Aa3 reflects the district's strong and improved financial position, evidenced by five consecutive years of surpluses. The rating also incorporates a small, stable tax base with average wealth levels and manageable debt burden.

Downgrades

• Butler County Transportation Improvement District, OH: Moody's downgraded this transportation improvement district's Series 2007 Highway Improvement Bonds to Aa3 from Aa2. The Aa3 rating on the Series 2007 bonds incorporates the credit characteristics inherent in Butler County's Aa2 GOLT rating, but is notched once below that rating to reflect the more limited security provided by the county's non-tax revenue pledge. Butler County's GOLT rating was downgraded to Aa2 from Aa1 on March 20, 2014.
• Trinity Area School District, PA: Moody's downgraded this school district to A2 from A1. The downgrade reflects the district's significant financial deterioration, following three consecutive years of reserve draws. The A2 rating further incorporates the moderately sized tax base, and manageable debt burden with rapid principal retirement.
• Covington, KY: Moody's downgraded this city to Baa1 from A2. The bonds are secured by the city's general obligation unlimited tax pledge. The downgrade to Baa1 reflects a history of deficit spending that has led to an extremely limited financial position with no near-term plans to rebuild reserves, which is compounded by the city's reliance on economically sensitive revenue streams.
• Butler County, OH: Moody's downgraded this county to Aa2 from Aa1. The Aa2 GOLT rating incorporates credit strengths tied to the county's sizeable tax base located between Dayton (Aa2 stable) and Cincinnati (Aa2 negative), sound demographic profile, and moderate debt burden. The rating also reflects credit challenges associated with the county's narrow General Fund position relative to other Aa-rated entities and its exposure to underfunded defined benefit retirement systems.
• Exeter Hospital, NH: Moody's downgraded this hospital to Baa2 from A3. The downgrade to Baa2 is attributable to the material downturn in Exeter's financial performance in FY 2013, resulting in negative operating cash flow and the trend of weakening performance exhibited over the last three years. Further downgrade is precluded at this time given the hospital's strong liquidity position.
• Maple Heights City School District, OH: Moody's downgraded this school district to Baa1 from A1. The downgrade to the Baa1 rating reflects the district's very narrow General Fund cash position and expected ongoing operating pressures. Also incorporated is the district's declining tax base located south of Cleveland (A1 stable); below average socioeconomic characteristics; high debt burden with slow payout; and elevated exposure to a two underfunded cost-sharing pension plans.
• Gresham-Barlow School District, OR: Moody's downgraded this school district to Aa3 from Aa2. The downgrade to Aa3 reflects the district's pressured financial operations. The district reduced expenditures through staff cuts and furlough days, but expenditures continue to outpace revenues with the district choosing to spend reserves to close the gap.
• New Mexico State University: Moody's downgraded this university to Aa3 from Aa2. The downgrade reflects the university's weakened operating performance and competitive enrollment pressures, leading to limited prospects for financial resource growth in line with Aa2-rated public universities.
• Paterson Parking Authority, NJ: Moody's downgraded this parking authority to Ba1 from Baa3. The downgrade to Ba1 reflects the parking authority's trend of very weak annual debt service coverage and a failure to meet rate covenant in 2012.
• Gainesville Hospital District, TX: Moody's downgraded this district to A2 from A1. The downgrade to A2 reflects the district's declining operating performance and financial position due to declining admissions and a use of liquidity to support capital projects, which continue to be challenged by anticipated revenue declines.
• Town of Tuxedo, NY: Moody's downgraded this town's general obligation rating to A1 from Aa3. The downgrade reflects the town's very narrow General Fund and operating fund balance after four years of operating deficits. The rating also incorporates the town's large residential tax base, above average wealth levels, and manageable debt position.