- Brainard's departure from the FED will remove a leading "dove" from the FOMC. The two top candidates currently are Karen Dynan and Janice Eberly. Both are different; Dynan might add to the hawkish voice on the committee, while Eberly would preserve the existing hawk-dove balance.
- Both women are outstanding and will do a great job keeping continuity within the FOMC. Eberly is closer to Brainard in her optimism that the FED can get inflation back to target without generating a significant slowdown in the labor market. Either selection will bring a meticulous, data-oriented approach to the FED board.
- The prospect of sticker inflation necessitating a more persistent monetary policy tightening from the FED continues to influence the markets. Continued Fed rate hikes and personal consumption expenditure numbers being hotter than expected.
- have kept stocks moving down and bond yields up, weighing on the market this week.
- MUNIs are getting cheap again, with credit ratings strong. T bills continue to increase in yield, with the two-year hitting its highest since July 2007, trading at 4.92% as of 3/2/23. The big question on rate moves will be by how much.
- MUNIs gave back overall pricing in February. This trend will continue to be the case in March unless the numbers change or we have revisions in the eco numbers.
- It will be hard for yields to reach 5% in March; however, we could get close to the October lows should the market persist. The DRL Group are heavy buyers at 4.40%+ YTW on AA-rated paper, which is a 7.00%.
- Supply for March is higher than in past months; therefore, this presents an opportunity for buyers looking to add to their MUNI portfolio. As discussed in the webinar last week, we continue to recommend sticking with quality paper.
At The DRL Group, we specialize in helping high-net-worth investors maximize tax-free returns by proactively maintaining their custom bond portfolios through all market conditions. We would love the opportunity to visit with you further. Please click here to schedule a call with one of our specialists or contact us at 281-398-8600.
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