7/16/2021 Market Commentary
Municipal bond yields saw very little movement during the week, despite Treasury yields having a turbulent week. The supply of bonds coming to market picked back up after the slow-paced weeks surrounding the July 4th Holiday. An estimated $10 billion of municipal bond issues came to market during the week, the most since the week of June 14th. Tax-exempt yields remained in place despite the larger volume due to the continued high level of demand for municipal bonds. Inflows into municipal bond mutual funds came in at $2.2 billion this week, marking the 19th consecutive week of inflows and the fifth week of inflows above $2 billion during that stretch.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| July 9, 2021 | 0.84% | 1.33% |
| July1 5, 2021 | 0.84% | 1.35% |
| Change (bps) | +0 | +5 |
Treasuries had a much more volatile week. The 30-Year Treasury yield pushed above the 2.00% threshold on Tuesday only to return to 1.92% on Thursday. The 10-Year Treasury yield saw even more volatility, reaching as high as 1.42% on Tuesday, only to bounce back to 1.30% by Thursday. On Wednesday, Fed Chairman Jerome Powell testified before the House Financial Services Committee, during which he emphasized that the economy is still a ways off from any tapering, and that the Fed will continue to hold rates near zero to support the economy until a full recovery. Powell stated that the recent inflationary pressures are transitory, and any preemptive tapering would harm the economy. Treasury yields fell on Wednesday after Powell’s statements and continued to decline Thursday, bringing Treasury yields close to the lows that were hit in February.
Treasury yields over the past two weeks
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| July 9, 2021 | 1.35% | 1.98% |
| July 15, 2021 | 1.30% | 1.92% |
| Change (bps) | -5 | -6 |
Written by Dan Shaw, Oppenheimer & Co. Inc., Public Finance Associate.
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