6/10/2022 Market Commentary
Municipal Bond yields experienced a steepening of the yield curve this week as yields dropped on the short end but rose on the long end. The 10-year and 30-year MMD rose 7 and 19 basis points, respectively. The steepening of the curve can be attributed to less demand on the long end as investors continue to worry over the pace of inflation.
In addition, Refinitiv Lipper reported $2.1 billion in mutual fund outflows this week, reversing the inflows reported last week. However, prices of municipal bonds continue to remain attractive compared to treasuries. Muni-to-UST ratios on Thursday were at 82% in 10 years and 94% in 30 years.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| June 3, 2022 | 2.43% | 2.78% |
| June 9, 2022 | 2.50% | 2.97% |
| Change (bps) | +7 | +19 |
Treasury yields rose this week as the European Central Bank indicated restrictive policies ahead to combat inflation in Europe, which now exceeds 8%. Investors continue to worry that higher interest rates to combat inflation will hurt economic growth and could cause a recession. In the United States, all eyes will be on the inflation data expected to be released on Friday.
Treasury yields over the past week
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| June 3, 2022 | 2.96% | 3.11% |
| June 9, 2022 | 3.04% | 3.18% |
| Change (bps) | +8 | +7 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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