7/22/2022 Market Commentary
Municipal bond yields saw a slight increase on the long-end of the yield curve this week, with the 30-year MMD increasing by 5 basis points. The short-end of the curve, which has seen more demand in recent weeks, was held in place. Influenced by their own fundamentals, municipal yields ignored the rally in U.S. Treasuries that on occurred on Thursday.
Supply of municipal bonds coming to market picked up this week, but demand has been much more of a mixed bag. After municipal bond mutual funds saw inflows of $206 million last week, investors reversed course and withdrew $699 million from municipal funds this week. The fluctuation in investor demand for municipal debt shows there are some investors out there who are enticed by the higher yields, but there are also investors who remain hesitant.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| July 15, 2022 | 2.44% | 2.98% |
| July 21, 2022 | 2.44% | 3.03% |
| Change (bps) | 0 | +5 |
Still reeling from the June Consumer Index Report that showed prices had increased by 9.1%, Treasury yields climbed during the first half of the week. The 10-year Treasury surpassed that 3% mark when it reached 3.04% on Wednesday. Treasuries went on to rally on Thursday, pulling Treasury yields back to where they started the week. Thursday’s rally was brought on by rising U.S. jobless claims and a worsening regional factory outlook, among other reports that indicate increasing risks of a recession.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| July 15, 2022 | 2.93% | 3.10% |
| July 21, 2022 | 2.92% | 3.08% |
| Change (bps) | -1 | -9 |
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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