3/26/2021 Market Commentary
- March 26, 2021
Tax-exempt municipal bond yields trended lower over the past few days as a result of increased demand in recent weeks. Inflows into municipal bond mutual funds have been very strong recently, breaching the $1 billion mark in each of the past two weeks. These large inflows were put to work this week, buying up the $10 billion new issue municipal bond supply with ease and pushing yields lower. Inflows into municipal bond funds during the current week were smaller than the past two weeks, but still significant at $592 million. As of Thursday, the 10-year and 30-year MMD each dropped 5 basis points over the course of the week.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| March 19, 2021 | 1.16% | 1.79% |
| March 25, 2021 | 1.11% | 1.74% |
| Change (bps) | -5 | -5 |
Treasury yields decreased each day this week, a rare occurrence in 2021. Treasury yields have been rising for most of the year due to increased fiscal spending from the Biden Administration and optimism surrounding the COVID-19 vaccine rollout. This week the COVID-19 recovery effort had some hiccups. COVID-19 infection rates have spiked in certain regions of the world, with some countries such as France and Germany extending their lockdowns. Treasury yields retreated at the news that the pandemic recovery may not be as smooth as it was thought to be a few weeks ago.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| March 19, 2021 | 1.73% | 2.45% |
| March 25, 2021 | 1.62% | 2.34% |
| Change (bps) | -11 | -11 |
On Wednesday, Fed Chairman Jerome Powell testified along with Treasury Secretary Janet Yellen before the House Committee on Financial Services regarding the CARES Act. During Powell’s prepared statement, he echoed his previous remarks that the economic recovery was far from complete, but that it has progressed more quickly than expected. He also mentioned that certain sectors hit hardest by the pandemic remain weak, and unemployment remains high.
Written by Dan Shaw, Oppenheimer & Co. Inc., Public Finance Associate.
Rick Brandis
Title:Managing Director
Nicki Tallman
Title:Managing Director
Disclaimer
All materials, including proposed terms and conditions, are indicative and for discussion purposes only. Finalized terms and conditions are subject to further discussion and negotiation and will be evidenced by a formal agreement. Opinions expressed are our present opinions only and are subject to change without further notice. The information contained herein is confidential. By accepting this information, the recipient agrees that it will, and it will cause its directors, partners, officers, employees and representatives to use the information only to evaluate its potential interest in the strategies described herein and for no other purpose and will not divulge any such information to any other party. Any reproduction of this information, in whole or in part, is prohibited. Except in so far as required to do so to comply with applicable law or regulation, express or implied, no warranty whatsoever, including but not limited to, warranties as to quality, accuracy, performance, timeliness, continued availability or completeness of any information contained herein is made. Opinions expressed herein are current opinions only as of the date indicated. Any historical price(s) or value(s) are also only as of the date indicated. We are under no obligation to update opinions or other information.
The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. Oppenheimer does not provide accounting, tax or legal advice; however, you should be aware that any proposed indicative transaction could have accounting, tax, legal or other implications that should be discussed with your advisors and or counsel. The materials should not be relied upon for the maintenance of your books and records or for any tax, accounting, legal or other purposes. In addition, we mutually agree that, subject to applicable law, you may disclose any and all aspects of any potential transaction or structure described herein that are necessary to support any U.S. federal income tax benefits, without Oppenheimer imposing any limitation of any kind.
Oppenheimer shall have no liability, contingent or otherwise, to the user or to third parties, or any responsibility whatsoever, for the correctness, quality, accuracy, timeliness, pricing, reliability, performance or completeness of the data or formulae provided herein or for any other aspect of the performance of this material. In no event will Oppenheimer be liable for any special, indirect, incidental or consequential damages which may be incurred or experienced on account of the user using the data provided herein or this material, even if Oppenheimer has been advised of the possibility of such damages. Oppenheimer will have no responsibility to inform the user of any difficulties experienced by Oppenheimer or third parties with respect to the use of the material or to take any action in connection therewith. The fact that Oppenheimer has made the materials or any other materials available to you constitutes neither a recommendation that you enter into or maintain a particular transaction or position nor a representation that any transaction is suitable or appropriate for you.
© 2021 Oppenheimer & Co. Inc. Transacts Business on All Principal Exchanges and Member SIPC. All rights reserved. No part of this presentation may be reproduced in any manner without the written permission of Oppenheimer. Oppenheimer & Co. Inc., including any of its affiliates, officers or employees, does not provide legal or tax advice. Investors should consult with their tax advisor regarding the suitability of Municipal Securities in their portfolio.