Public Finance
9/15/2023 Market Commentary
September 15, 2023
Municipal bond yields continued to inch higher this week, with the 10-year and 30-year MMD each increasing by 2 basis points. Municipal bond mutual funds saw another week of outflows, with investors pulling roughly $117 million from municipal funds. While municipal yields are near their 15-year highs, many investors remain on the sidelines in case the Fed enacts additional rate hikes.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| September 8, 2023 | 2.98% | 3.92% |
| September 14, 2023 | 3.00% | 3.94% |
| Change (bps) | +2 | +2 |
Treasury yields also edged higher this week, with the 10-year and 30-year Treasury yields increasing by 3 and 5 basis points, respectively. The August Consumer Price Index released on Wednesday was hotter than expected, with prices increasing by 0.6% in August, and 3.7% year-over-year. This marks the highest inflation figures since June 2022.
Core inflation rose 0.3% in August, a jump from the 0.2% in July. Over the last 12 months, core inflation has increased 4.3% percent. While the report was a bit of a disappointment, it was not enough of a shock to warrant a change in market expectations for the September FOMC meeting. Analysts are still projecting a 97% chance that the Fed does not enact a rate hike at the September meeting. The August CPI Report may however give some sway towards a rate hike at the November FOMC meeting.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| September 8, 2023 | 4.26% | 4.33% |
| September 14, 2023 | 4.29% | 4.38% |
| Change (bps) | +3 | +5 |
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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