Municipal Bond Market Trends
Munis showed a firmer outlook in the long term, with notable monthly and yearly gains.
According to Birch Creek strategists, the technical picture is expected to improve in November and December, likely rewarding the wider new issue concessions caused by the heavy new issue calendar.
In a recent trading session, munis were firmer out long, while USTs richened 10 years and in, and equities ended mixed. The muni-UST ratios were as follows:
- 2-year: 67%
- 5-year: 65%
- 10-year: 70%
- 30-year: 90%
Birch Creek strategists noted that munis continued to underperform for the second consecutive week, primarily due to front-end weakness. Jason Wong, vice president of municipals at AmeriVet Securities, stated that the front end saw 2026-2029 maturities experience a two to five basis point cut, while the rest of the curve saw yields bumped one to five basis points.
"the wider new issue concessions brought about via the heavy new issue calendar will likely be rewarded."
Author's summary: Munis show promise with monthly and yearly gains.