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10/28/2022 Market Commentary

  • Oppenheimer & Co. Inc.
  • October 28, 2022
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municipal bond yields

Municipal bond yields rose sharply this week in a complete divergence from what occurred in the treasury market. The 10- and 30-year MMD rose 25 and 35 basis points respectively. As a result, Muni-to-UST ratios rose sharply as well. As of Thursday, ratios were at 86% in 10 years and 102% in 30 years.

Municipal yields continue to feel the pressure from relentless outflows, which totaled another $1.8 billion last week.

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Tax-exempt yields over the past week
  10-Year MMD 30-Year MMD
October 20, 2022 3.16% 3.81%
October 27, 2022 3.41% 4.16%
Change (bps) +25 +35

Treasury yields declined this week as investors digested a slew of economic reports and a somewhat softer tone from the Federal Reserve. GDP data came in better than expected but other data showed that the rapid rise in interest rates is starting to hit the economy, with the PMI Index showing contraction in both the services and manufacturing sectors.

Investors still expect the Federal Reserve to raise rates by 0.75% at next week’s FOMC meeting, but there is now some hope that the Federal Reserve may begin to slow the pace of rate increases going forward. Investors will be anxious to hear from Fed Chairman Powell during his post meeting press conference.

Treasury yields over the past week
  10-Year Treasury 30-Year Treasury
October 20, 2022 4.24% 4.24%
October 27, 2022 3.96% 4.12%
Change (bps) -28 -12

Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.


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