Market News Commentary - From The Desk of David Loesch 10.30.2018Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on October 30th, 2018
- Chicago Sales Tax bonds were downgraded to AA- with a stable outlook on 10/23/2018.
- Morningstar indicated that people should steer clear of Nuveen’s High Yield funds due to its “liberal use” of leverage.
- Morgan Stanley is indicating that we will have an upside to the MUNI supply side past US elections. They believe a “healthy pickup in new money issuance should continue into 2019”
- San Diego County voters will decide on a ballot measure that would prohibit local officials from siphoning money meant for pensions and block them from using long term muni bonds to buy for “day to day” operations. This is an important ballot and will be interesting to see if it passes. This directly impacts Chicago, Dallas and other cities that are having trouble meeting their pension obligations.
- Chicago BOE’s sold 200MM of TAN’s at a 2.45% yield for 1-2 years on 10/26/2018
- MUNI’s are the cheapest to T bills in six months, this signals that our markets should be and will be attractive to investors. The ratios of 10-year MUNI’s to T reached 80% which is the highest since 4/2018. From a historical perspective MUNI’s should start performing at this level, and with the “lack” of supply we are seeing.
- Miami could face a tough situation in the near future as it has to dip into reserves for their pension issue for 53.5MM, this will drop the city 10MM below the self-imposed min threshold
- Although state and local pension plans have remained stable over the past few years, the gap between the best and worst funded systems has grown.
- A CA ballot measure to reverse a 54B revenue increase Democrats enacted in 2017 to fund roads and bridges is up for voting to ratify at this time.
- Bank of America indicated again that the MUNI markets might be in the early stages of a rally as it rebounds from the selloff that came in October of 2018. The banks analysts said that clients have turned more constructive on MUNIs.
- State and local governments will pay off 64B of bonds over the next two months of 2018. I view this is a net positive for MUNI’s as there is nowhere near that much coming out for issuance.
- It would be my pleasure to speak to you directly about the current markets and how The DRL Group can be of service to your fixed income investment portfolio. To schedule a time to talk, please email me at firstname.lastname@example.org.
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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