06/07/2024 Market Commentary
- June 7, 2024
Municipal bond yields declined sharply this week with the 10- and 30-year MMD ending the week down by 21 and 20 basis points respectively. Municipals demonstrated strength, despite a huge increase in supply. This week saw $16 billion of issuance come to market, the most since December of 2021 and a continuation of a trend we have seen all year.
Total issuance for the year through May stands at $191 billion, up 33.5% compared to 2023. The month of May saw bond volume in excess of $43 billion, the highest amount since 2016 and up 47% compared to May of last year. Several factors have contributed to the surge in bond issuance this year, including waning federal aid, delayed capital plans resuming, and acceptance among issuers of the current interest rate environment.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| May 30, 2024 | 3.11% | 3.96% |
| June 6, 2024 | 2.90% | 3.76% |
| Change (bps) | -21 | -20 |
Treasury yields rallied this week following the release of several economic reports that all pointed to a cooling labor market. The ADP Jobs report released on Wednesday showed that companies added a total of 152,000 jobs in May, much less than economists had expected and the lowest monthly job gains since January. Additionally, April job openings fell to 8.06 million, a decline of 300,000 from March and the lowest level since February 2021. The more closely watched May Labor report will be released on Friday. Investors will be looking for further signs of cooling in the labor market, which could provide further support for rate cuts later this year.
Next week will also be a busy week for the markets as the Federal Reserve is scheduled to meet on June 11/12 where they are widely expected to keep interest rates unchanged. Investors will also be looking to the release of the May CPI inflation report which is due out the same day on June 12th.
Treasury yields over the past week:
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| May 30, 2024 | 4.55% | 4.69% |
| June 6, 2024 | 4.28% | 4.43% |
| Change (bps) | -27 | -26 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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