Market News Commentary - From The Desk of David Loesch 11.13.2018Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on November 13th, 2018
Democrats won the US House on 11/6/2018 as expected, this will mean a “check” on Trump as we move through the next 2 years. A Democratic House (first since 2010) would leave Trump without congressional support to move his agenda forward including another round of tax cuts. The election also brought 76.3B of bond referendums, this is the most since 2006.
Will the post-election stabilize outflows? MUNI bonds investors as you know have been pulling money out of funds for the last 6 weeks which has been the biggest stretch of money movement since Trump was elected. Many are calling for fund inflows as investor anxieties around the election subside.
Voters voted and approved 24.4B of bonds to support schools and infrastructure buildout, the market is strong and you will see many new deals over the course of the next 3 months.
Economic data is in focus on 11/9/2018, after the FED indicated that it would not raise rates, the street is looking towards December and how the FED will react.
IL governor elect is creating a “balanced” budget and will submit to the transition team shortly. This is a huge plus for the state assuming he can get this done and passed. The rating agencies will look at this closely and weigh the pros and cons of this submission.
As the strong economy continues to move ahead, States also continue to resist going on a spending spree. Many states are adding cash to their balance sheets, overall this is a great thing for our markets, safety and security is one aspect that customers look for in MUNI’s. Price deterioration hurts, but they know that they will get the money back if they hold to maturity. Overall cash balances grew 3% over the last fiscal year ending July 1 2018.
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 email@example.com.
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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