- 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 12.23.2020Submitted by Tax Free Municipal Bonds/Fixed Income Specialists/DRL Group on December 23rd, 2020
- On many occasions, the FED has indicated that rates will not move for the next several years and unanimously approved to keep the FED Funds rates at 0.00 to .25%, where it has been since March. We remain buyers of High-Grade paper, while also starting to put money <3 years around a .5-.60% YTW tax exempt. Our focus, however, remains on the longer end of the curve with a five-year call.
- The CT state budget gap is shrinking. They now estimate the deficit to be $640.2MM, down from $800MM last month. Bond sales and corporate revenue continue to climb for this state and positively impact their debt. I suspect we will see this in many states as the economy gets "going again" and people get back to work in 2021. I expect few downgrades and some upgrades as states and municipalities continue to improve their overall finances.
- For the 1st Q of 2021, there is $66B worth of bonds maturing, with another $10B slated to be called in prior to maturity. These redemptions will produce an enormous influx of cash into the market, leaving fewer bonds to buy. I expect pricing to hold firm or move up as we move through the 1st Q due to supply/demand. Pricing should move up as we get through the 1st Q 2021.
- As expected, Congress passed a bill for a government funding stimulus package. This package is not directed towards municipalities and states; however, it will continue to give investors the confidence they need to enter the markets and buy securities. The bill is geared towards small businesses and includes money for schools, airlines, and vaccine distribution. Many say the aid will be enough to avert a double-dip recession next year; however, the FED continues to caution against slow growth and high unemployment.
- MTA indicated that it would receive $4B in aid from the economic stimulus agreement struck in Congress, allowing the system to keep thousands of jobs and slow cuts to the bus, subway, and commuter train services. The latest package will help balance the MTA’s budget through 2021 by making up for its steep revenue declines. MTA insured paper should continue to be a good buy and provide good yields for those seeking higher yields while staying safe.
- The Securities Industry and Financial Markets Association issued information to assist market participants with planning for the potential of a negative interest rate policy in the US. SIFMA is not forecasting a US negative rate policy in the near term, however many members of SIFMA have expressed concerns of a negative rate environment over the next two years. This report is the first type of language I have seen by a regulatory agency that addresses this concern.
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.