For the $3.7 trillion municipal bond market, Washington’s political divide may be a good thing.
Yields on top-rated tax-exempt 10- year debt exceeded those of comparable U.S. Treasuries for the first time since Dec. 1 as investors favored shorter-term debt amid slower municipal issuance.
The biggest rally in 30-year state and local debt since June may be fleeting amid signs the Federal Reserve will begin cutting back its bond purchases, leading to higher interest rates.
The $3.7 trillion municipal-bond market is heading for its worst monthly performance since June. If the past decade is any guide, October may be even worse.
Detroit’s proposed 74 cent recovery rate on general-obligation debt, almost five times more than its last offer, has sent yields to the lowest in 10 months and signals a broader rally in local government securities.
The partial U.S. government shutdown has closed the gates to Alex Thevenin’s place of business: the Grand Canyon.
The threat from Washington to the $3.7 trillion municipal market’s tax break won’t go away.
The municipal market is beating a broader U.S. fixed-income rally as states and cities borrow at the slowest rate since 2011. If history is any guide, March will bring a reversal.
"If anything is going to diffuse a possible supply overhang, it would be strong muni fund flows."
- John Dillon on Nov 17, 2014