MunicipalBonds.com provides information regarding the performance of muni bonds for the past week in comparison with Treasury yields, as well as details regarding the net inflow in the muni market.
Muni bonds declined heavily last Monday but then managed to stabilize for the remainder of the week.
There was a notable upgrade for the Millbrae School District, CA’s GO Bonds rating by Moody’s, the details of which are provided below. Also, we provide a quick outlook on Puerto Rico’s bond market performance.
Full-Week Bond Market Summary for June 27 - July 01
- All the muni bond yields declined last Monday before stabilizing for the rest of the week.
- Muni bond market underperformed Treasury bond market.
- 55% of the total muni bond flow is from second quarter.
- President Obama signed the Puerto Rico’s debt crisis bill.
Detailed Report
- Most of the yields continued to decline last week, but the largest drop in the yields was seen on Monday as a Brexit effect.
- Market probability for a rate hike has now been postponed to early 2017.
- 5- & 30-year muni bond yields managed to rally by a few bps last week.
- New issue supply of $9.3B was absorbed last week.
- This is a holiday-shortened week and only $1.4B issuance is expected.
- Muni fund flow managed to be positive for the 40th consecutive week.
- Just a day before the island territory was about to face a $1.9B of debt, President Obama signed the bill addressing Puerto Rico’s debt crisis.
Moody’s Upgrade/Downgrade
Moody’s Upgrade/Downgrade
Upgrades:
Millbrae School District, CA’s GO:
Moody’s Investors Service has upgraded to Aa1 from Aa2 Millbrae School District, CA’s GO Bonds. The upgrade reflects growth in tax base, strong wealth measures and improving financial position. Similar growth in tax base and attainment of Basic Aid funding status could lead to an upgrade.
Downgrades:
Godwin Heights Public Schools, MI’s GOULT:
Moody’s Investors Service has downgraded to A2 from Aa3 the underlying rating on Godwin Heights Public Schools, MI’s GOULT. It reflects the district’s narrowed financial position. Material improvements in the district’s reserves and liquidity could lead to an upgrade of the bonds.
Municipal Index Curve Yields
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.59% | 0 | -23 |
| 5-year | 0.88% | 2 | -32 |
| 10-year | 1.33% | -3 | -36 |
| 30-year | 2.10% | 2 | -38 |
The What Do Higher Interest Rates Mean for Muni Bonds? article explains the effects of higher interest rates on muni bonds and ways to protect your portfolio.
