MunicipalBonds.com provides information regarding the performance of muni bonds for the past week in comparison with Treasury yields, as well as details regarding the net inflow in the muni market.
- Treasury as well as muni bond yield saw an increase in yield last week, breaking the wave of decreasing yields that were flowing over the last few weeks.
- There was a notable upgrade for the Mamaroneck Fire District 1, NY’s GO Bonds rating by Moody’s – the details of which are provided below.
- There was no major news update on the Puerto Rico bond market last week.
Full-Week Bond Market Summary for July 11-15
- All the Treasuries’ maturities shorter than 30 years reached the highest yield levels in the last three weeks.
- Longer maturities yield rose more than shorter maturities yield for muni as well as Treasury bonds last week.
- Strong U.S. economic data shows positive signs for the growth of the economy and policy normalization.
Detailed Report
- The bond market saw an increase in yields last week for the first time since the Brexit vote took place last month.
- Treasury yields rose last week in response to global news, which decreased bond prices and in turn attracted more bond investors.
- Increase in Treasury rate was also supported by the U.S. economic data.
- 10-year Treasury yield rose the most by 19 bps in a week.
- Strong U.S. economic data shows positive signs for economic growth and policy normalization but the Fed didn’t comment on the next rate hike.
- Muni bond prices declined last week due to an increase in its yields.
- 30-year muni bond yield rose the most by 15 bps but still lags the 30-year Treasury yield.
- Most of the deals for last week’s new issuance of $9.3B were oversubscribed.
- This week’s new issue calendar is expected to be $7.5B.
- High yield municipal fund inflows totaled $335M.
- The muni bond deals were well received overall.
Moody’s Upgrade/Downgrade
Upgrades:
- Mamaroneck Fire District 1, NY’s, GO:*
Moody’s Investors Service has upgraded Mamaroneck Fire District 1, NY’s GO from Aa3 to Aa2. It reflects the district’s sizeable and appreciating tax base, stable financial operations, strong socioeconomic profile and low debt burden. More growth in tax base, reserves and liquidity could lead to an upgrade of this bond.
Downgrades:
- Brookfield, IL’s, GOULT:*
Moody’s Investors Service has downgraded Brookfield, IL’s GOULT debt to A2 from A1. The depreciating tax base located within the Chicago metropolitan area, rising pension and debt liabilities are the main concerns of the downgrade. Renewed and sustained tax base appreciation could lead to an upgrade of this bond.
Treasury Notes Yield Report
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.67% | 6 | 9 |
| 5-year | 1.11% | 16 | 11 |
| 10-year | 1.55% | 19 | 8 |
| 30-year | 2.27% | 17 | -2 |
Municipal Index Curve Yields
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.59% | 0 | 1 |
| 5-year | 0.88% | 2 | -1 |
| 10-year | 1.45% | 14 | 10 |
| 30-year | 2.10% | 15 | 8 |
Yield Ratios: Municipal Bonds vs. Treasury Bonds
| Yield Ratios | Ratio (%) |
|---|---|
| 10-year AAA Municipal vs Treasury | 91% |
| 30-year AAA Municipal vs Treasury | 91% |
| High Yield Municipal vs High Yield Corporate | 79% |
The How Slowing Tax Revenue Affects State Munis article provides a look at how slowing tax revenues affect state muni bonds, as well as some considerations for investors holding them.
