Public Finance
12/08/2023 Market Commentary
December 08, 2023
Municipal bond yields continued to decline this week, with the 10-year MMD having now fallen 108 basis points since November 1st. The remarkable decline in rates has brought the 10-year MMD 14 basis points below where it started the year. The municipal bond yield rally this week came from a supply-demand imbalance this week as issuers paused in anticipation of the upcoming Fed meeting next week. Outflows continued this week with $144.5 million pulled from municipal funds.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| November 30, 2023 | 2.63% | 3.77% |
| December 7, 2023 | 2.50% | 3.71% |
| Change (bps) | -13 | -6 |
Treasury yields saw a drop in rates this week as the 10 and 30-year fell 20 and 27 basis points, respectively. The drop in rates stems from increased investor confidence that there will be no rate hike at the Fed meeting next week. Markets now price in a 97.7% chance that rates will remain unchanged.
On Friday morning, the November jobs report was released, which showed that employers added 199,000 jobs during the month, and the unemployment rate fell from 3.9% to 3.7%. The better-than-expected report put the recent Treasury market rally on hold.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| November 30, 2023 | 4.34% | 4.51% |
| December 7, 2023 | 4.13% | 4.24% |
| Change (bps) | -20 | -27 |
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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