Generally speaking, the prices are delayed by 5 – 15 minutes. As most bond prices don’t move as quickly as stocks (with the exception of Treasury and Agency bonds), a delayed bond price is a pretty good barometer of where the market is currently trading.
If LearnBonds gave out gold medals for useful tools, BondView would certainly win one. They have an excellent indicative bond pricing engine for Municipal Bonds which not only takes into account the individual bond’s recent pricing activity, but the activity of similar bonds. This enables Bond View to provide an approximate indicative bond price even when the bond has not traded in some time.
Free Service Offerings: Bond Screener, Delayed Transaction Data (Last Price), Indicative Pricing
MunicipalBonds.com has a great table showing benchmarking the current yields for Municipal Bonds by state and maturity date.
Free Service Offerings: Bond Screener, Delayed Transaction Data (Last Price), Municipal Rate Table
All brokers must report their municipal bond trades to the MSRB (Municipal Securities Rulemaking Board) within 15 minutes of the trade or face potential regulatory action. EMMA is their system for collecting and distributing market data.
Free Service Offering: Bond Screener, Delayed Transaction Data.
All brokers must report their agency and corporate bond trades to FINRA within 15 mintues of the trade or fact potential regulatory action. TRACE (Trade Reporting and Compliance Engine)is their system for collecting and distributing bond price data. In addition, they have tables which show the number of bonds rising and declining in value at the end of the day.
There are three broad types of bond prices that frequently are reported:
Last price is the price at which the last trade in the bond was executed. Last price can be extremely useful when the last trade was recently reported. In may cases, particularly in municipal bonds, the last trade can be weeks or months old, providing misleading information. Also, you want to be aware of who was involved in the last trade.
If the trade was between two dealers, then the last price will be a better market indication then if the trade was between a dealer and a customer. (The customer might have traded on an off market bond price.)
Bid / Ask Spread
All securities have a bid/ask spread. The ask is the current price where you can sell a security and the bid is the price at which you can buy. In most stocks, the difference between the bid and ask is very small – 1 to 2 pennies per share. This is not the case with bonds. The spread can be 1, 2 or even 3 percent wide.
A 3 percent spread would mean a difference of $30 per bond being bought. When there is a wide spread, most dealers will call around to each other and see if they can improve on it. The real price of the bond can be anywhere within that very wide spread.
Indicative / Estimated
Because of the problems mentioned above, there are a few services that provide independent valuation of bond values. However, just because they believe that the value is at a certain price does not mean that you will be able to obtain that price on the market.
This lesson is part of our Free Guide to the Basics of Investing in Municipal Bonds and our Free Guide to Investing in Corporate Bonds. Continue to the next municipal bond lesson here and the next corporate bond lesson here.Want to learn how to generate more income from your portfolio so you can live better? Get our free guide to income investing here.