Public Finance
03/01/2024 Market Commentary
March 01, 2024
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.
Disclaimer
Disclaimer: All materials, including proposed terms and conditions, are indicative and for discussion purposes only. Finalized terms and conditions are subject to further discussion and negotiation and will be evidenced by a formal agreement. Opinions expressed are our present opinions only and are subject to change without further notice. The information contained herein is confidential. By accepting this information, the recipient agrees that it will, and it will cause its directors, partners, officers, employees and representatives to use the information only to evaluate its potential interest in the strategies described herein and for no other purpose and will not divulge any such information to any other party. Any reproduction of this information, in whole or in part, is prohibited. Except in so far as required to do so to comply with applicable law or regulation, express or implied, no warranty whatsoever, including but not limited to, warranties as to quality, accuracy, performance, timeliness, continued availability or completeness of any information contained herein is made. Opinions expressed herein are current opinions only as of the date indicated. Any historical price(s) or value(s) are also only as of the date indicated. We are under no obligation to update opinions or other information.
The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. Oppenheimer does not provide accounting, tax or legal advice; however, you should be aware that any proposed indicative transaction could have accounting, tax, legal or other implications that should be discussed with your advisors and or counsel. The materials should not be relied upon for the maintenance of your books and records or for any tax, accounting, legal or other purposes. In addition, we mutually agree that, subject to applicable law, you may disclose any and all aspects of any potential transaction or structure described herein that are necessary to support any U.S. federal income tax benefits, without Oppenheimer imposing any limitation of any kind.
Oppenheimer shall have no liability, contingent or otherwise, to the user or to third parties, or any responsibility whatsoever, for the correctness, quality, accuracy, timeliness, pricing, reliability, performance or completeness of the data or formulae provided herein or for any other aspect of the performance of this material. In no event will Oppenheimer be liable for any special, indirect, incidental or consequential damages which may be incurred or experienced on account of the user using the data provided herein or this material, even if Oppenheimer has been advised of the possibility of such damages. Oppenheimer will have no responsibility to inform the user of any difficulties experienced by Oppenheimer or third parties with respect to the use of the material or to take any action in connection therewith. The fact that Oppenheimer has made the materials or any other materials available to you constitutes neither a recommendation that you enter into or maintain a particular transaction or position nor a representation that any transaction is suitable or appropriate for you.
© 2024 Oppenheimer & Co. Inc. Transacts Business on All Principal Exchanges and Member SIPC. All rights reserved. No part of this presentation may be reproduced in any manner without the written permission of Oppenheimer. Oppenheimer & Co. Inc., including any of its affiliates, officers or employees, does not provide legal or tax advice. Investors should consult with their tax advisor regarding the suitability of Municipal Securities in their portfolio.
6446212.1