5/21/2021 Market Commentary
Tax-exempt bond yields held steady for the most part throughout the week. While equities were in for a turbulent week and Treasury yields saw some movement, tax-exempt yields held steady due to the fundamentals in place. The $8.5 billion of municipal bonds brought to market was easily absorbed as demand for municipal bonds remains very high. The expectation of higher taxes has been a driver of this demand, and so has an improved credit picture for most public agencies after receiving aid from the most recent stimulus bill. These factors have outweighed the inflation fears that have strongly affected treasury yields and the equities market.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| May 14, 2021 | 1.02% | 1.60% |
| May 20, 2021 | 1.01% | 1.58% |
| Change (bps) | -1 | -2 |
Treasury yields rose on Wednesday following news that a number of Federal Open Market Committee members have discussed tapering the Fed’s current spending levels as appropriate if the economy continues to improve. These statements were revealed in the previous meeting’s minutes that were released Wednesday. Treasury yields rose as much as 5 basis points on the news.
The spike in yields only lasted for a day, before equities rallied on Thursday and brought Treasury yields back to where they were at the start of the week, and even lower on the long-end.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| May 14, 2021 | 1.64% | 2.36% |
| May 20, 2021 | 1.64% | 2.34% |
| Change (bps) | +0 | -2 |
Written by Dan Shaw, Oppenheimer & Co. Inc., Public Finance Associate.
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