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11/04/2022 Market Commentary

  • Oppenheimer & Co. Inc.
  • November 4, 2022
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municipal bond yields

The Federal Reserve hiked interest rates by another 75 basis points this week. This was the fourth consecutive rate hike of this size in what has become the steepest increase in interest rates in 40 years. Additionally, the 75 basis point rate increase brings the policy rate up to its highest levels since January 2008.

Bond yields initially dropped after the policy announcement as the Fed hinted at the possibility of slowing the pace of future rate increases. However, bond yields quickly reversed course following Chairman Powell’s press conference where he signaled that the terminal rate will likely be higher than originally anticipated. Chairman Powell also indicated that the Fed was undecided about just how high rates may need to go to curb inflation.

Municipal bond yields ended the week slightly lower, with the 10- and 30-year MMD down 5 and 8 basis points respectively.

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Tax-exempt yields over the past week
  10-Year MMD 30-Year MMD
October 27, 2022 3.41% 4.16%
November 3, 2022 3.36% 4.08%
Change (bps) -5 -8

Treasury yields rose this week as investors digested hawkish comments from Chairman Powell. The short end was especially impacted with the 2-year Treasury rising 41 basis points since last Thursday.

Treasury yields over the past week
  10-Year Treasury 30-Year Treasury
October 27, 2022 3.96% 4.12%
November 3, 2022 4.14% 4.18%
Change (bps) +18 +6

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


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