- CPI increased 8.5% from last year; it was 7.9% in February.
- Barclays says the municipal market is due to rebound from a record decline in the first quarter, and it's a good time to start buying. "At current levels, a significant amount of bad news has already been priced in, and muni valuations are cheap enough to outperform Treasuries for the remainder of the year." On Monday, Strategists Mikhail Foux, Clare Pickering, and Mayur Patel said, "In our view, current levels present a good entry point to start slowly adding muni exposure."
- Municipal-bond issuers have sold ten deals of a billion dollars or more in 2022 and are on pace to challenge or beat the record of 26 set in 2020.
- Primary market: Visible supply finishes the week at $8.2 billion, well below the 2021 average of $11.4 billion. I saw repricing deals almost every afternoon this week. I do not think they will be able to keep this up long.
- The number of bonds investors were looking to sell last Wednesday hit $2 billion, the most since March 2020. This year, Munis have posted a 6.8% loss, a drop for an asset class known for its stability. Two-year AAA Muni yields are trading at 1.9% from 0.03% in August 2021. There is an opportunity to buy cheap paper and favor those that can take the risk in this market. I think the market will stabilize and recover in the last few months of the year.
- The Federal Reserve signaled it would reduce its massive bond holdings at a maximum pace of $95 billion a month, further tightening credit across the economy as the Central Bank raises interest rates to cool the hottest inflation in four decades. Minutes also showed that "many" Fed officials would have favored raising rates by a half-percentage point last month but deferred to a quarter-point move considering Russia's invasion of Ukraine. They also viewed one or more half-point increases as possibly appropriate going forward if price pressures fail to moderate.
605-B Park Grove
Katy, TX 77450
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