06/28/2024 Market Commentary
Municipal bond yields edged up slightly this week after a large new issue calendar saw $12 billion in new supply come to market. This brings total volume for the year up to nearly $225 billion. This is an increase of over 38% from this time last year. Bond volume is often front loaded during a presential election year. This is usually attributed to issuers seeking to avoid the market volatility that is associated with a presidential election in November. As a result, many investors expect bond volume to decline in the second half of the year.
Tax-exempt yields over the past week
| 10-Year MMD | 30-Year MMD | |
|---|---|---|
| June 20, 2024 | 2.79% | 3.69% |
| June 27, 2024 | 2.84% | 3.72% |
| Change (bps) | +5 | +3 |
Treasury yields also ticked up this week as investors brace for the Commerce Department to release the PCE Inflation Report on Friday. The Report is currently expected to show little to no change in May, which would mark the first time in 6 months that the report did not show a month-to-month increase in inflation.
Even more importantly, the Core PCE reading (which removes volatile food and energy prices) is expected to produce its lowest reading since March 2021. Investors are hopeful that a favorable reading could increase the odds for additional rate cuts this year.
Treasury yields over the past week:
| 10-Year Treasury | 30-Year Treasury | |
|---|---|---|
| June 20, 2024 | 4.25% | 4.39% |
| June 27, 2024 | 4.29% | 4.43% |
| Change (bps) | +4 | +4 |
Written by Michael Garcia, Associate, Oppenheimer & Co. Inc., Public Finance.
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