2/25/2022 Market Commentary
Municipal bond yields edged lower on Thursday after news broke that Russia had launched a full invasion of Ukraine. It was a week in which geo-political headlines dominated all markets. Municipal bond yields were steady in the days leading up to the invasion, with investors nervous as to how the situation would unfold. Once Russia began their attack, the 10-year and 30-year MMD each dropped by 8 basis points.
Municipal bond mutual funds saw $1.15 billion of outflows during the week, following up last week’s $1.29 billion fund outflows. Despite the recent outflows, muni yields dropped due to a flight-to-safety effort by investors.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| February 18, 2022 | 1.65% | 2.02% |
| February 24, 2022 | 1.57% | 1.94% |
| Change (bps) | +14 | -8 |
Treasury yields and equities were also centered on the conflict in Ukraine. News of the attack caused stocks to fall Thursday morning, and Treasury yields fell as a result. The 30-year Treasury yield had fallen by as many as 12 basis points in the early hours of the morning. However, things reversed course during the trading day. Equities pulled out of the red by closing, and Treasury yields climbed back to their positions from the previous day.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| February 18, 2022 | 1.93% | 2.25% |
| February 24, 2022 | 1.95% | 2.27% |
| Change (bps) | +2 | +2 |
Written by Dan Shaw, Oppenheimer & Co. Inc., Public Finance Associate.
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