MunicipalBonds.com provides information regarding the performance of muni bonds for the past week in comparison with Treasury yields and net fund flows, as well as the impact of monetary policies and relevant economic news.
- Treasuries and muni yields increased for the second week in a row.
- Muni bond funds saw outflows, reversing last week’s positive inflows.
- Be sure to review our previous week’s report to track the changing economic situation.
Job Reports Miss But Labor Market Still Strong
- The ADP Employment Report came in lower than expected at 158,000, lower than the 180,000 consensus amount. Although lower than expected, this measure is still strong when paired with the low unemployment figures.
- International trade showed a deficit of negative $46.5 billion, which was very close to the expectation amount of $46.2 billion. Exports rose 0.4% in the month to $192.0 billion, while imports decreased by 0.1% to $238.5 billion.
- Jobless claims increased by 4,000, bringing the total to 248,000 for the week. This was slightly higher than the consensus number of 244,000. Despite a slight increase in the four-week average figure to 243,050, this slight uptick is not an indication that the labor market is losing steam.
- The employment situation was released on Friday and nonfarm payrolls showed a month-over-month increase of 222,000, higher than the expected 170,000 level. Private payrolls also beat expectations, at 187,000 versus the 164,000 estimates. Unemployment came in higher than expected at 4.4%, versus the 4.3% consensus.
- Last week, the Fed’s balance sheet increased by $3.9 billion in assets, bringing the total level to around $4.467 trillion. The weekly increase is because of the central bank liquidity swaps that rose $3.0 billion and other assets that rose by $1.3 billion.
- During the week, money supply (M2) increased by $35.7 billion, a reversal from last week’s decrease of $4.3 billion.
Keep track of economic indicators that might impact the muni market.
Bond Yields Increase for Second Week In a Row
- Treasury yields increased for the second week in a row, with the 2-year Treasury yield increasing 2 bps to 1.40%. The 10-year Treasury yield is also up 9 bps this week and is now yielding 2.39%. The 30-year Treasury yield saw the week’s biggest increase, up by 10 bps to 2.93%. Municipal yields also increased this week, with the 2-year AAA-rated bonds yield increasing 7 bps at 1.06%. The 10-year AAA-rated bond yields increased 6 bps to 2.02%, while the 30-year yield increased 6 bps and is now yielding 2.87%.
- Credit spreads increased slightly, with the largest spread between the 5-year Treasury and the AAA-rated municipal increased slightly by 1 bps to settle at 55 bps. The spread between the 30-year securities increased by 4 bps this week and now stands at 6 bps.
Be sure to check our Market Activity section to keep track of daily muni trades and historical trades of muni CUSIPs across the U.S.
Credit Spread
| Maturity | Treasury Yield | Muni Yield | Spread (in BPS) |
|---|---|---|---|
2-year | 1.40% | 1.06% | 34 |
5-year | 1.95% | 1.40% | 55 |
10-year | 2.39% | 2.02% | 37 |
30-year | 2.93% | 2.87% | 6 |
Muni Bond Funds Reverses Last Week’s Positive Trend
- Muni bonds funds saw an outflow this week of $461 million this week, after seeing an inflow of $413 million last week.
California Health Facilities Financing Authority Issues Refunding Revenue Bonds
The California Health Facilities Financing Authority issued over $434 million refunding revenue bonds this week. The bonds are to benefit the Sutter Health Group, a nonprofit health organization that primarily operates in Northern California. The bonds are rated AA- by Fitch, Aa3 by Moody’s and AA- by S&P. To browse credit reports of other muni bonds issued by the State of Michigan, click here.
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Rating Decision Updates on Muni Bonds
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Moody’s Upgrades Whitefish Bay School District, WI’s GO to Aa1: The Whitefish Bay School District of Wisconsin had $3.8 million of the area’s general obligation unlimited tax bonds to Aa1 from Aa2. The area has seen its reserve levels getting stronger after ten consecutive years of surplus. To explore additional credit reports about other muni bonds issued by the State of Wisconsin, click here.
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Moody’s Downgrades to A3 Capac Community Schools, MI; Outlook is Negative: Capac Community Schools of Michigan had its GOULT debt downgraded to A3 from A2. The area had $5.9 million of its debt outstanding downgraded because the school has seen severe enrollment losses mixed with a fund balance decline. To explore additional credit reports about other muni bonds issued by the State of Michigan, click here.
We provide this report on a weekly basis. To stay up to date with muni bond market events, return to our News page.
