• Treasury yields were mixed, while municipal yields all fell.

• Muni bond funds saw inflows, a reversal from last week’s trend.

• Be sure to review our previous week’s report to track the changing market conditions.

• Fed Chairman Jerome Powell spoke this week about how the U.S. monetary policy’s role in driving economic conditions is often exaggerated. Powell stated that the Fed keeping rates low and then raising them should not disrupt the marketplace. The Fed has made a clear plan in regards to its interest rates and what factors dictate interest rate hikes.

• The Job Openings and Labor Turnover Survey (JOLTS) was higher than expected, at 6.550 million this week. The consensus was at 6.100 million and this most recent reading was higher than February’s 6.078 million reading.

• Consumer Price Index saw a gain of 0.2% on a month-over-month basis, slightly lower than the consensus of 0.3%. On a year-over-year change, the reading matched expectations at 2.5%. The Fed monitors CPI to ensure that inflation stays under control.

• The Bloomberg Consumer Comfort Index decreased to 55.8 from 56.5. Although this measure fell again, it is still just off its all-time highs, but the drop can be attributed to the volatility in the stock market.

• Jobless claims saw no change this week to a total of 211,000, which was lower than the consensus amount of 220,000. This measure is still near the 49-year low, which the level hit a few weeks ago. The four-week average decreased to 216,000 and is still hovering around record-low levels.

• The Fed’s assets increased by $2.1 billion this week, bringing the total asset base to around $4.358 trillion. The Fed has been reducing its balance sheet since September 2017, and for 2018, the Fed’s Treasury holdings will be reduced by $270 billion, while holdings of mortgage-backed securities will be reduced by $180 billion.

• During the week, money supply (M2) decreased by $8.2 billion, a reversal of last week’s $16.1 billion increase.

Keep track of economic indicators that might impact the muni market.

• Treasury yields were mixed this week, with the 2-year Treasury gaining 3 bps to yield 2.53%. The 10-year Treasury dropped 7 bps and now yields 2.88%. The 30-year Treasury yield increased by 1 bps and now yields 3.13%. Municipal yields were all down this week with the 2-year AAA-rated bond falling 1 bps to yield 1.85%. The 10-year AAA-rated bond decreased by 2 bps to yield 2.44%, while the 30-year AAA-rated bond fell 2 bps to yield 3.03%.

• Credit spreads increased this week, with the largest spread between the 5-year Treasury and the AAA-rated municipal bond now standing at 75 bps. Meanwhile, the spread between the 30-year securities increased to 10 bps.

Be sure to check our newly launched Municipal Bond Screener to explore muni bond CUSIPs across the U.S based on custom parameters including the issuing state, insurance status and a range for different bond attributes such as maturity, coupon, price and yield.

Muni bonds reversed this week and saw inflows of $143 million after last week’s outflows of $355 million.

The largest issue of the week comes from the state of Georgia, which had over $1 billion of revenue bonds. The bonds are made up of three issues: the Sub-series 2018C with over $605 million bonds, Sub-series 2018D with $242 million and Sub-series 2018E with $153 million. The bonds are being issued to help finance the purchase of the area’s gas supply from the Royal Bank of Canada. The bonds are rated AA by Fitch and A1 by Moody’s.

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Moody’s Upgrades Comal County’s, TX, Issuer & GOLT Ratings to Aa1; Assigns Aa1 to GOLT Bonds, Series 2018: Moody’s upgraded the city of Comal County of Texas from Aa2 to Aa1 this week, which affects over $140 million of outstanding general obligation limited tax (GOLT) bonds. It also assigned an Aa1 rating to the county’s $15 million of its Limited Tax General Obligation Bonds, Series 2018. The area has seen significant increases in its financial status, thanks to growing tax revenues and a manageable debt burden.

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Moody’s Downgrades Colorado School of Mines (CO) to A1, Assigns A1 to Series 2018A, Aa2 Enhanced Affirmed; Outlook Revised to Stable: Moody’s downgraded $233 million of the Colorado School of Mines (CSM) of Colorado outstanding parity revenue bonds this week. In conjunction, it assigned an A1 underlying rating to the $37.9 million of the Institutional Enterprise Revenue Refunding Bonds, Series 2018A. Moody’s also affirmed the Aa2 rating of the $122 million of outstanding revenue bonds qualified for the state intercept program. The downgrade reflects the additional debt financed capital projects that are planned over the next few years.

We provide this report on a weekly basis. To stay up to date with muni bond market events, return to our News page.