04/26/2024 Market Commentary
- April 26, 2024
Municipal bond yields continued to rise this week due to recent economic reports and weakness in the treasury market. Municipals also had to contend with one of the largest new-issue calendars of the year, with bond volume reaching close to $13 billion. The 10- and 30-Year MMD ended the week up by 7 and 6 basis points respectively.
In other news, municipal bond funds saw a return to inflows with many attributing much of last week’s $1.5 billion in outflows to the tax filing deadline.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| April 18, 2024 | 2.74% | 3.90% |
| April 25, 2024 | 2.81% | 3.96% |
| Change (bps) | +7 | +6 |
GDP numbers were released on Thursday and showed that the U.S. economy grew at an annualized rate of 1.6% in the 1st quarter. This was much weaker than economists had expected and a noticeable slowdown compared to the 3.4% growth reported for the final quarter of 2023. Additionally, the PCE index showed that prices rose at an annual rate of 3.4% in the first quarter, the biggest quarterly gain in a year and well above the Fed’s 2% target rate.
This was a worrying signal to the market which has had to repeatedly reduce their rate hike expectations for the year. Treasuries rose on the news, and are now trading at their highest levels since November of last year. Markets are now pricing in a roughly 70% chance for a first rate cut in September.
Treasury yields over the past week:
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| April 18, 2024 | 4.64% | 4.74% |
| April 25, 2024 | 4.70% | 4.82% |
| Change (bps) | +6 | +8 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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