Municipal Bond Market Trends
Munis showed firmer results in the long term, with notable monthly and yearly gains.
According to Birch Creek strategists, the technical picture is expected to improve in November and December, potentially rewarding the wider new issue concessions caused by the heavy new issue calendar.
On Tuesday, munis were firmer out long, while USTs richened 10 years and in, and equities ended mixed. The muni-UST ratios were:
- 2-year: 67%
- 5-year: 65%
- 10-year: 70%
- 30-year: 90%
Birch Creek strategists noted that munis continued to underperform for the second consecutive week, mainly due to front-end weakness.
Jason Wong, vice president of municipals at AmeriVet Securities, stated that the front end saw 2026-2029 maturities experience 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 firmer long-term results despite short-term underperformance.