06/21/2024 Market Commentary
After edging lower last Friday, Municipal bond yields held steady during the holiday-shortened week. Tax-Exempt yields have held in place for the last three trading days. Municipal bond yields ignored any Treasury movement this week, as the demand for municipals has been high enough to hold yields in place.
Inflows into municipal bond mutual funds have begun to pick up. Muni funds saw inflows of $16 million this week, marking the third consecutive week of fund inflows. A large share of the inflows has come from long-term funds, as investors are seeing a good opportunity to lock in higher yields.
While there was little movement in yields this week, June has been kind to municipal bonds. Since May 31st, the 10-year and 30-year MMD have dropped by 32 and 27 basis points, respectively.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| June 13, 2024 | 2.83% | 3.73% |
| June 20, 2024 | 2.79% | 3.69% |
| Change (bps) | -4 | -4 |
Treasury yields saw a bit more fluctuation this week, but ended up not far off of last Friday’s levels. The market is still digesting last weeks May CPI report, that showed inflation has cooled, as well as the Federal Reserve Boards decision to hold the federal funds rate during last week’s FOMC meeting. The market is currently expecting the Fed’s first rate cut to occur at the September FOMC meeting.
Treasury yields over the past week:
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| June 13, 2024 | 4.24% | 4.40% |
| June 20, 2024 | 4.25% | 4.39% |
| Change (bps) | +1 | -1 |
Written by Dan Shaw, Director, Oppenheimer & Co. Inc., Public Finance.
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