10/13/2023 Market Commentary
- October 13, 2023
Bond yields fluctuated greatly this week as the market reacted to various economic and geopolitical developments. After rates rose last Friday due to the especially strong September Jobs Report, rates reversed course on Monday in response to the terrorist attacks in Israel. The market experienced a general “flight to safety” into bonds, causing rates to drop by up to 22 basis points in both the Treasury and Municipal markets.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| October 5, 2023 | 3.50% | 4.39% |
| October 12, 2023 | 3.36% | 4.24% |
| Change (bps) | -14 | -15 |
Treasury yields remained volatile on Thursday following the release of the September CPI report. The CPI report showed that headline inflation rose at an annual rate of 3.7% in September, slightly higher than economists had expected. This increase in inflation was largely attributed to rising shelter costs. Treasury yields ended the week down slightly, despite the run up in rates on Thursday.
The September CPI report did not have as large of an impact on the Municipal bond market. This led to Municipals outperforming Treasuries this week. The 10 and 30-year MMD ended the week down by 14 and 15 basis points respectively. Muni-to-UST ratios dropped as a result. Ratios ended the week at 70% in year 2 (-3%), 70% in year 10 (-4%), and 87% in year 30 (-3%).
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| October 5, 2023 | 4.72% | 4.88% |
| October 12, 2023 | 4.70% | 4.86% |
| Change (bps) | -2 | -2 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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