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Market News Commentary - From The Desk of David Loesch 01.30.2020Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on January 30th, 2020
- With yields so low, I know it is hard to accept the fact of "Is that actually worth buying?" I hear this from accounts as well, but the alternative is equity or private equity. The markets are overall at a precarious place; many believe that the equity market might tank soon, leaving the bond market the only safe- haven, if this is the case, perhaps rates can move lower? In any event, I know it's hard to accept these yields. No one knows where we will be in 45 days from now, but to date, flow is strong, and cash is substantial.
- Economic activity shrank in 8 states and was stagnant in 3 others during the 4th Q of 2019. West VA economy contracted the most, while a decline in neighboring PA was among the worst in the nation. Overall, municipalities across the country faired very well. With rates this low, you would think that many will refinance into this "boom" of new issues.
- Fund Flows continue to be heavy; investors added 2.93B to MUNI bond funds the week ended 1/22 marking the 55th straight week. Many dealers whom I met with in NY this week thought this increased flow would continue. Twenty-twenty may not be as good of a year as 2019 from a return on investment standpoint but could be another excellent year for muni’s due to the lack of supply and vast amounts of cash on the books.
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