11/11/2022 Market Commentary
Municipal bonds rallied hard on Thursday after the release of the October Consumer Price Index. The report showed prices rose 7.7% year-over-year, lower than the estimated 7.9% increase. The report was welcomed by most financial markets, municipals included. By Thursday’s close, the 10-year and 30-year MMD dropped by 12 and 18 basis points, respectively. The 18 bps drop on the long-end of the curve was the largest single-day drop since March of 2020. In fact, if you exclude the pandemic, this was the largest drop for the 30-year MMD since June of 2013.
Thursday’s rally now puts municipal yields close to where they were in mid-to-late October.
Tax-exempt yields over the past week
|November 4, 2022
|November 3, 2022
Treasuries saw an even bigger rally on Thursday, with yields dropping by as many as 31 basis points on the short-end of the curve. October’s inflation report gave investors a glimmer of hope that inflation is cooling. Markets are hoping that we are past the peak, and that the Fed can start slowing the pace of rate hikes. It is important to keep in mind, that while the 7.7% inflation rate was lower than anticipated, it is still much higher than the 2% target rate set by the Federal Reserve Board.
Treasury yields over the past week
|November 4, 2022
|November 10, 2022
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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.
© 2022 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.