Municipal Bonds Show Improvement
Munis firmer out long, with monthly and yearly gains observed.
According to Birch Creek strategists, the technical picture is turning "more favorable" during November and December, and they believe "the wider new issue concessions brought about via the heavy new issue calendar will likely be rewarded."
The wider new issue concessions brought about via the heavy new issue calendar will likely be rewarded.
Municipal Market Data reported the following muni-UST ratios on Tuesday: two-year at 67%, five-year at 65%, 10-year at 70%, and 30-year at 90%. Similarly, ICE Data Services reported ratios of 67% for two-year, 64% for five-year, 70% for 10-year, and 90% for 30-year munis.
Despite this, munis continued to underperform for the second consecutive week, mainly due to front-end weakness. Jason Wong, vice president of municipals at AmeriVet Securities, noted that 2026-2029 maturities experienced a two to five basis point cut, while the rest of the curve saw yields bumped one to five basis points.
Author's summary: Munis show signs of improvement amid favorable technical picture.
- Tuesday's muni-UST ratios:
- 2-year: 67%
- 5-year: 65%
- 10-year: 70%
- 30-year: 90%
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