11/18/2022 Market Commentary
As of Thursday’s close, municipal bond yields have now dropped for eight consecutive trading days. Last week’s better-than-expected inflation report has jumpstarted a November rally for municipals. The supply of bonds coming to market remains light, but demand has started to pick up. In fact, municipal bond mutual funds saw $605 million of inflows this week, breaking a 14-week streak of fund outflows. These fundamentals have caused yields to drop significantly. Since, November 1st, the 10-year and 30-year MMD have dropped by 48 and 53 basis points, respectively.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| November 10, 2022 | 3.14% | 3.88% |
| November 17, 2022 | 2.91% | 3.59% |
| Change (bps) | -23 | -29 |
Treasury yields trended lower during the first half of the week, but reversed course on Thursday, after multiple Federal Reserve officials signaled that the Fed has no plan of slowing down rate hikes quite yet. The statements caused the 10-year Treasury yield to jump by 8 basis points on Thursday. Treasury yields still ended lower than where they started the week, but underperformed municipals.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| November 10, 2022 | 3.84% | 4.09% |
| November 17, 2022 | 3.78% | 3.89% |
| Change (bps) | -6 | -20 |
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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