Public Finance
01/05/2024 Market Commentary
January 05, 2024
Municipal bond yields held steady this week with little to no change in the 10- and 30-year MMD. The holiday-shortened week saw light volume in what has typically been a lighter month for municipal bond issuances. However, investors are optimistic about a rebound in bond volume this year, as declining interest rates make bond refinancings more economical.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| December 28, 2023 | 2.28% | 3.42% |
| January 4, 2024 | 2.28% | 3.43% |
| Change (bps) | +0 | +1 |
Treasury yields rose in the first week of 2024 by 16 basis points for both the 10- and 30-year Treasury. The increase in rates came as a result of better-than-expected employment numbers. The ADP employment report showed that 164,000 jobs were added in December, indicating continued strength in the labor market. Investors are closely monitoring the employment reports in order to anticipate what actions the Federal Reserve may decide to take at their next meetings. The fear among investors is that if job numbers repeatedly over perform expectations, the Federal Reserve may decide to postpone cutting rates until later in the year.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| December 28, 2023 | 3.84% | 4.98% |
| January 4, 2024 | 4.00% | 4.14% |
| Change (bps) | +16 | +16 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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