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Market News Commentary - From The Desk of David Loesch 02.20.20Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on February 20th, 2020
- With the 10T hovering around the 1.56% range, most accounts and Funds believe that it will continue to move down in yield, as I do as well. With the overall uncertainty of the markets along with the presidential election coming up, I think the bond market will show positive returns through the year at least until October.
- MUNI yields are now the lowest since the 1950s; this creates enormous opportunities like Washington DC to score margin financing. Many municipalities will take advantage of this historical time to issue new debt. I find it interesting that many (including me) think the yields are going lower or, at the very least staying the same.
- Visible supply climbed to 17B; its high for 2020 and well above the average of 13B.
- Benchmark 10 Year State paper: CA 1.17, FL 1.25, IL 2.07, NY 1.09, PA 1.43, TX 1.31.
- High-income states such as NY and CA, retail accounts are looking at the emerging market segment of the 3.8 trillion MUNI markets. Most of the bonds are "unique" in the fact where they carry low ratings or no rating at all. Some retail accounts are seeking higher-yielding paper and completely ignoring the existence of the instability of the underlying asset.
- Coronavirus issues continue to push yields down, the longer end of the curve.
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