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11/11/2022 Market Commentary

  • Oppenheimer & Co. Inc.
  • November 11, 2022
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municipal bond yields

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.

Brandis Tallman in san francisco
Tax-exempt yields over the past week
  10-Year MMD 30-Year MMD
November 4, 2022 3.36% 4.08%
November 3, 2022 3.14% 3.88%
Change (bps) -22 -20

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
  10-Year Treasury 30-Year Treasury
November 4, 2022 4.16% 4.25%
November 10, 2022 3.84% 4.09%
Change (bps) -32 -16

Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.


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