Public Finance
01/19/2024 Market Commentary
January 19, 2024
Following four weeks of steady rates, the Municipal Bond market changed course this week with the 10- and 30-year MMD increasing by 16 and 12 basis points respectively. Despite the increase in rates, Munis remain rich compared to Treasuries. The Muni-to-UST ratios ended the week at 60% in year 5, 59% in year 10, and 82% in year 30.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| January 11, 2024 | 2.28% | 3.45% |
| January 18, 2024 | 2.44% | 3.57% |
| Change (bps) | +16 | +12 |
Treasury yields also climbed this week with the 10- and 30-Year Treasury rising by 16 and 18 basis points respectively. The increase comes as labor market data released Thursday echoed positive labor market reports previously released in January. This week also saw Fed officials make comments suggesting that rate cuts are more likely to occur later in the year. As a result, investors have become less confident in a rate cut coming in March and markets now increasingly believe the first rate cut will not occur until at least May.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| January 11, 2024 | 3.98% | 4.19% |
| January 18, 2024 | 4.14% | 4.37% |
| Change (bps) | +16 | +18 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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