Market News Commentary - From The Desk of David Loesch 10.16.2018Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on October 16th, 2018
- Closed End Funds continue to get pounded in both NAV and net interest cost. The discount between the share price and the underlying assets are averaging 11.1% as of 10/12/2018.
- Many states have reason to share Trumps unhappiness with the FED. CA, IL, WI, and CT are all preparing to sell 2.30B in bonds collectively just as rates are ticking up. Many states have indicated that they will put many issues on “hold” until rates settle down, this lack of supply might help overall pricing.
- Estimates on Hurricane Michael will cost 25B in economic losses. About 3B will fall on the federal floor insurance programs and private insurers should get hit with 9B of claims.
- JP Morgan beats estimates which will help the markets on 10/12/2018.
- Texas will decide the fate of 8 billion of city and school bonds issues during the next month’s election, this is a decline of 30% from a year ago, even as the population grows. 73 state and local financing measures are on the ballots across the state, with the Fort Bend ISD being at the top of that list for a borrow of 993MM. Austin is a close second at 925MM.
- The percentage of state and local government bond deals that were insured fell 5.40% at the end of the 3rd Q, this is the lowest since 2013. Many municipalities are > A rated therefore using a AA rated insurance company does not make sense assuming it will not enhance credit quality.
- Nuveen indicated on 10/15 that they believe MUNI yields will be “lower” in 2019 as FED policy cools the economy. They indicated that individual investors should remain buyers of the market while focusing on longer dated MUNI’s
- Pittsburgh Water and Sewer was downgraded on 10/15/2018.
- Midterms will be interesting to watch, I do not think it will impact MUNI’s, however if the Democrats take control, it might impact the infrastructure bonds that have been slated for 2019 if spending does not get under control.
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This content is based on the opinions of David Loesch based on his review of articles from Bloomberg.com or CNBC.com.
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