3/12/2021 Market Commentary
Tax-exempt yields trended lower throughout the week, falling just over 10bps on the long end from their positions last week. Overall it was a good week in the muni market, headlined by President Biden signing the $1.9 trillion COVID-19 relief bill into law, which included $350 billion of direct aid to state and local governments. Inflows into municipal bond mutual funds returned this week, with just over $1 billion flowing into municipal funds, reversing course from last week’s $600 million of outflows. News of the stimulus plan and the return of fund inflows were happily accepted by the bond market, and resulted in lower yields.
Tax-exempt yields over the past week:
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| March 5, 2021 | 1.11% | 1.76% |
| March 11, 2021 | 1.02% | 1.65% |
| Change (bps) | -9 | -11 |
Treasury yields jumped higher early in the week, but returned to their previous positions quickly, giving investors their first sign of stabilized Treasury yields since early February. Treasury yields had been rising for the past month due to optimism surrounding the stimulus package and decreasing COVID-19 inflections, but took a pause this week as 10-year and 30-year Treasury auctions were met with strong demand.
Treasury yields over the past week:
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| March 5, 2021 | 1.55% | 2.28% |
| March 11, 2021 | 1.53% | 2.29% |
| Change (bps) | -2 | +0 |
Written by Dan Shaw, Oppenheimer & Co. Inc., Public Finance Associate.
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