- 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 10.08.2020Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on October 8th, 2020
- Investors added $947MM to MUNI Bond Funds as of Wednesday compared to an outflow last week. Investors view increases in yields as a buying opportunity. I suspect this trend will continue as we move through the month, which will create more buyers in our markets.
- The minutes from the FOMC meeting indicated that Central Bankers wanted to retain some flexibility concerning the new framework on rates. Policymakers abstained from providing further details on both the future pace and structure of any asset purchases. As buyers of paper, we know that the significant uncertainty about our economy's outlook justifies the need to maneuver and creates a general agreement amongst participants that the outcome-based forward guidance on Fed Funds was not an unconditional commitment to a specific path.
- Within the FED, there is general agreement that additional financial support is required, and most participants and staff have built this into their 2020 projections. With additional funds hitting the markets from stimulus packages, this should continue to give the investors’ confidence in buying paper.
- Green Bonds continue to be a growing segment of the MUNI markets, with $258B of debt and loans issued in 2019 up from $171B in 2018. The growth was led by the broader European market, which accounted for 45% of the total issuance. Many European investors are restricted to only buying Green Bonds. International investors have also been increasingly purchasing this type of paper. MUNI bonds are an increasingly valuable asset to buyers in Europe and Asia because of the high-quality and better yields than their sovereign debt. I believe this segment of buyers will continue to grow as we move through 2021.
- Sales in MUNI's are pressuring yields as many municipalities want to get their financing done before the elections. I expect we will see volumes move up as we get closer to the election. Buyers will not mind the increase in yields given how low they have fallen as the FED indicated rates would remain low. I suspect we will see a "buying" spree over the next few weeks as yields move higher with the increased demand.
- NYC was downgraded by Moody’s last week. In a pair of downgrades announced within one hour of each other on Thursday, Moody's dropped both the city and the state one notch to Aa2, the third-highest investment-grade rating, and warned of an extended return to normal as the region tries to recover. The downgrade reflects the substantial financial challenges NYC faces caused by the virus's economic issues. This downgrade is also the first time Moody's has cut the NYC and NY state ratings in 30 years. The outlook will remain negative, and I suspect S&P to come out with a cut or statement soon.
605-B Park Grove
Katy, TX 77450
This report has no regard to the specific investment objectives, financial situation, or needs of any particular 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 construed as a solicitation or an offer to buy or sell 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.