4/07/2023 Market Commentary

Oppenheimer & Co. Inc. April 07, 2023

Municipal bond yields declined this week as recent jobs numbers have increased fear among investors about a possible recession. The 10- and 30- Year MMD have dropped by 17 and 15 basis points respectively.

The Municipal bond market continues to benefit from an overall lack of supply. Municipal bond volume declined 30% in March on a year-over-year basis, continuing a trend that we have seen through the first quarter of the year. This supply and demand imbalance has contributed to rich Muni-UST ratios on the short end of the curve. Muni-UST ratios are at 60% in year 2, 62% in year 5, and 64% in year 10.

Brandis Tallman in san francisco
Tax-exempt yields over the past week
  10-Year MMD 30-Year MMD
March 30, 2023 2.27% 3.33%
April 6, 2023 2.10% 3.18%
Change (bps) -17 -15

Treasury yields rallied this week in response to the weaker than expected jobs numbers. Job openings fell below 10 million in February for the first time since May of 2021. Additionally, weekly jobless claims numbers came in higher than expected. Investors have interpreted these reports as evidence that interest rate hikes may finally be impacting the labor market. These reports have also added to market speculation that the Federal Reserve may take a pause in hiking interest rates at their next board meeting in May. Investors will be closely monitoring the March jobs numbers due out on Friday.

Treasury yields over the past week
  10-Year Treasury 30-Year Treasury
March 30, 2023 3.55% 3.74%
April 6, 2023 3.30% 3.54%
Change (bps) -25 -20

Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.

Disclaimer

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.

© 2023 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.