- The House finally passed the debt ceiling bill. We should now see some bounce back and stability next week.
- The most active issues this week have been with maturities in 2040-2044, which is the sweet spot right now for Munis.
- Outflows from Muni Mutual Funds totaled $671M, compared to $132M the prior week, the biggest since March 2022.
- The Federal Government will cut $28B in COVID relief spending: many states will also reduce this spending. These reductions should help ease inflation.
- According to The Financial Times, Cleveland FED Chief Loretta Mester said there is no "compelling reason” for the FED to pause rate hikes. Former US Secretary of the Treasury, Lawrence Summers, said he thinks rates will head higher in the short run-on inflation, and it will continue to be the narrative for the next couple of months.
- June should be an interesting month, starting with a debt ceiling deal results and the FED meeting after. With last week’s inflation news, another rate hike in June and July is possible. We should see a hike of 0.25% in June. Our markets are prepared for this and will react little.
- According to data compiled by Bloomberg, municipal bonds lost 1.38% in May. Barring a significant rally, it puts this month on track for the worst May performance since 1986, when bonds lost 1.63%. Over the last decade, Munis have gained an average of .9%, typically the strongest month of returns, buoyed by expectations of summer rallies. We should see some of these gains in June due to the significant funds coming into the market with bond redemptions. This dip may be an ideal entry point for sideline Muni buyers.
At The DRL Group, we specialize in helping high-net-worth investors maximize their
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.
David Loesch
dloesch@drlgroup.net
605-B Park Grove
Katy, TX 77450
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