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.
- Treasury yields had few bp increases in the last week, where only 30-year muni bond yield had a noticeable increase in the same period.
- There was a notable upgrade for the North Castle Fire District 2, NY’s GOLT 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 July 18-22
- Treasury yields rose last week, but not by very large bps.
- Only 30-year muni bond yield rose last week compared to other maturities.
- The market’s eyes are on the Fed meeting to be held in this week.
- New group forms to be addressed for Puerto Rico’s unprecedented economic crisis.
Detailed Report
- Treasury yields rose across the curve last week by few bps.
- 2-year maturity yield rose maximum by 3 bps.
- Increase in yields was reflected last week in response to the Turkey coup failure, which reduced the risk-off expectation in the market.
- The market has its eyes on the Fed meeting to be held this week but no major output is expected from the meeting.
- No noticeable change in yields of muni bonds, except for 30-year maturity yield, which increased by 5 bps.
- New issue supply of $8.8B was well-absorbed.
- New issue supply for this week is expected to be $6B.
- The average flow into high-yield muni bonds for 2016 is expected to be $251M.
- Fund flows have also been steady and consistent for the past few weeks making it easier for the market to trade.
- Elected officials for the Island territory will most likely address various forms to resolve Puerto Rico’s unprecedented issues.
Moody’s Upgrade/Downgrade
Upgrades:
North Castle Fire District 2, NY’s, GO:
Moody’s Investors Service has upgraded North Castle Fire District 2, NY’s GOLT rating to Aa1 from Aa2. The upgrade reflects the district’s large tax base, strong wealth levels and stable finances. More improvement in the fund balance can lead to more upgrades for these bonds.
Downgrades:
City of Ogdensburg, NY’s, GOULT:
Moody’s Investors Service has downgraded the city of Ogdensburg, NY’s GOLT rating to Baa2 from Baa1. The downgrade reflects continued decline in the city’s liquidity and reserves. Trend of structurally balanced operations leading to improved liquidity and fund balance could lead an upgrade for these bonds.
Treasury Notes Yield Report
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.70% | 3 | 12 |
| 5-year | 1.12% | 1 | 12 |
| 10-year | 1.57% | 1 | 10 |
| 30-year | 2.28% | 2 | 0 |
Municipal Index Curve Yields
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.59% | 0 | 1 |
| 5-year | 0.88% | 0 | -1 |
| 10-year | 1.45% | 0 | 10 |
| 30-year | 2.15% | 5 | 13 |
Yield Ratios: Municipal Bonds vs. Treasury Bonds
| Yield Ratios | Ratio (%) |
|---|---|
| 10-year AAA Municipal vs Treasury | 92% |
| 30-year AAA Municipal vs Treasury | 94% |
| High Yield Municipal vs High Yield Corporate | 76% |
How to Look at Insured Municipal Bonds article shows the factors to consider while investing in insured municipal bonds.
