
While some parts of the curve saw some slight movement, municipal bond yields for the most par held fairly steady this week. The 10-year and 30-year MMD were unmoved, marking the 9th consecutive trading day in which those maturities have not wavered.
The low supply of bonds coming to market in recent weeks have been key in holding rates in place. While volume did pick up this week, it was met with an uptick in demand as well. Municipal bond mutual funds saw inflows of $72.3 million, snapping a 3-week streak of fund outflows. The higher demand levels were able to absorb the spike in supply coming to market, holding yields in place.
Consistent with recent weeks, Muni-Treasury ratios 10-years and in remain extremely low, nearing lows from 2021. Muni-Treasury ratios in years 2 – 10 are all below 60%. Historically, Muni-Treasury yields are most commonly in the 75%-80% range.
Tax-exempt yields over the past week
10-Year MMD | 30-Year MMD | |
---|---|---|
February 23, 2024 | 2.46% | 3.59% |
February 29, 2024 | 2.46% | 3.59% |
Change (bps) | +0 | +0 |
Treasury yields were fairly tame this week as well, with yield levels ending the week not too far off from where they started. Given the current state of the market, investors have all but given up on a rate cut at the March 20th Federal Open Markets Committee meeting, with analysts now projecting a meager 8% chance of a rate cut that meeting. Yield levels have factored in a 24% chance of a rate cut at the May 1st FOMC meeting. A majority of the market expects the first rate cut to occur in June.
Treasury yields over the past week:
10-Year Treasury | 30-Year Treasury | |
---|---|---|
February 23, 2024 | 4.26% | 4.38% |
February 29, 2024 | 4.25% | 4.38% |
Change (bps) | -1 | +0 |
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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