- As anticipated, consumer prices rose briskly at the start of the year, indicating persistent inflationary pressures that could push the FED to raise rates higher than expected. The CPI climbed to .5% in January, the most in 3 months, bolstered by energy and shelter costs. The measure was up 6.40% from a year earlier. This stat will mean rates will continue to increase (no surprise). The big question will be how much and will the FI markets decline in price more than we expect.
- Back from the brink of a junk rating, IL faces more challenges than other states maneuvering its budget to weather an impending recession. Investors in the lowest-rated US state said they want to know how it plans to prepare for the expected economic slowdown that risks dimming the outlook of their state.
- US consumer sentiment climbed to a more than one-year high in early February as more upbeat views for current conditions outweighed concerns of a possible recession. Consumers expect inflation to rise 2.90% over the next 5-10 years, unchanged from the previous two months. Many, including me, believe there could be a soft landing. The FED recognizes economic numbers are coming down and adjusting its outlook and language to accommodate. MUNIs should continue to do well as we move through the year, and cash should continue to move into this market.
- Florida senators approved the bill, giving the governor control over the board of a special district home to Disney World Resort. It is interesting to see how the overall politics of a state and company views enter the world of MUNIs. Disney-elected board members can no longer run the district. This news is a good thing for our markets and the security of the bonds.
- Visible supply is starting to pick up at $8.42B, just below the average of $8.49B for the year. This added supply will pressure our markets through the balance of this month and perhaps into March.
- Yields have ticked up over the last seven business days, which we will discuss on the Webinar today, 2/16. Eco numbers have signaled "stick" inflation at this time; as the curve shifts up, there are swaps within SMA's that could be taken advantage of based on dollar price. Have questions, give us a call.
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