- Call us at 866-664-4040
- About Us
- Trading Philosophy
- Municipal Bond Offerings
- Municipal Bond News
- Contact Us
- Client Login
Market News Commentary - From The Desk of David Loesch 01.23.2020Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on January 23rd, 2020
- To put it into perspective, the last time MUNI yields were this low was in 1950. The bond buyers 20-year index of GO bonds reset at 2.56% this past week, the lowest since 6/1956. The 20-year bond index Is the oldest gadget of yields in the MUNI market and started by the newspaper in 1917. Many believe that if T bills continue to go lower, the yields on MUNI's long term could get to a 2.00% this year. I am skeptical of this; however, I do foresee the yields moving lower to around 2.25% on munis.
- Analysts are forecasting a record-setting year for new bond issuance for 2020, most sales over the past six months have had an enormous demand by both retail and institutional accounts. As we move through the 1st Q of 2020, I do not expect this pattern to grow weaker.
- Over the next month, about 25B of MUNI debt will be paid off (called or mature). Bondholders will receive another 13B of interest payments in February, while mutual funds continue as we know to pull in cash. Yet over the next four weeks, only a fraction of this month may find new paper to buy. There will be only 13B of bonds issued in the next month; this should push pricing up over this period. The demand for paper continues and has been fueled by Trump's tax law in 2017 and the SALT. This trend should continue in 2020, as we discussed.
- As for inflows into the markets, many analysts such as WRET, MLCO, Goldman, and JP Morgan see this trend not reversing for a while. With the February calendar light on new issues, I personally also do not see any pullback on pricing on the horizon despite what T bills do.
- PR's revenues exceed the government's estimates by nearly 600MM in the first five months of fiscal 2020 as corporate tax receipts continue to surpass projections. This revenue growth is great for PR and the bonds, overall, this credit has performed very well over the past 12 months, and I expect it to continue as we move through this year.
605-B Park Grove
Katy, TX 77450
This report has no regard to the specific investment objectives, financial situation, or needs of any specific recipient. This report is based on information obtained from sources believed to be reliable, but no independent verification has been made, nor is its accuracy or completeness guaranteed. This report is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Opinions expressed herein are subject to change without notice and the division, group, subsidiary or affiliate of MACC., which is under no obligation to update or keep the information current. The securities described herein may not be eligible for sale in all jurisdictions or to specific categories of investors. MACC accepts no liability for any loss or damage of any kind arising out of the use of this report. Please contact your tax advisor regarding the suitability of tax-exempt investments in your portfolio. Income from municipals may be subject to state and local taxes as well as the Alternative Minimum Tax. Corporate and Municipal securities are subject to gains/losses based on the level of interest rates, market conditions, and credit quality of the issuer. As with any security, there is an inherent market risk possibility as to principal if the security is not held to maturity. The bonds that are non-rated (NR) should be considered for investment by knowledgeable and sophisticated investors. Additional information will be made available upon request.
Securities are offered through Mid Atlantic Capital Corporation (MACC), a registered Broker-Dealer, Member FINRA/SIPC.
The DRL Group. is not a registered entity or a subsidiary or control affiliate of MACC.
Bonds are subject to market and interest rate risk if sold prior to maturity. Prices and availability may change at any time without notice. Insured bonds are subject to the claims-paying ability of the insurance company.
Reminder: Email sent through the Internet is not secure. Do not use email to send us confidential information such as credit card numbers, change of address, PIN numbers, passwords, or other important information. Do not email orders to buy or sell securities, transfer funds, or send time sensitive instructions. We will not accept such orders or instructions. This email is not an official trade confirmation for transactions executed for your account. Your email message is not private in that it is subject to review by the Firm, its officers, agents, and employees. Unless expressly stated in this email, nothing in this message should be construed as a digital or electronic signature.