- According to a recent article on Bloomberg, "Investors looking for entry points to the municipal-bond market are in luck after a surprise bear flattening in May pushed yields higher." We have been saying this same comment for weeks. There is an opportunity at these yields and a lower entry point than we’ve seen in months. Our market has become much more attractive going into the summer, but this will only last for a while; yields will come back down.
- New York’s biggest debt issuers have tentative plans to sell $6.1 billion of bonds in June and July, including $2.64 billion of new money and $3.42 billion of refunding deals. This financing will be something to watch for NY and could temporarily disrupt the NY bond market as the deals are underwritten. In the long term, this will only impact the market a little as we are getting used to seeing big deals come out of NY almost weekly.
- Most active: The most-traded issue on Monday was the Raleigh NC 4% revenue bond due in 2053: with a $13 million value. This point is interesting because this deal has maturities out 30 years from now, a trend we will likely see continue.
- The Primary market was active this week, the biggest issue being a $641.8M New York City of Housing deal.
- The Secondary market traded a high volume of bonds last week. This level of activity should continue this week.
- US mortgage rates increased for a third straight week, reaching the highest since November. The average for a 30-year, fixed loan climbed to 6.79%, up from 6.57% last week. The housing market is interesting because we have been expecting prices to drop for the previous year, and while we have seen some drops, they are starting to reverse again. Current homeowners are holding on to their last low-interest-rate mortgages and not putting their houses on the market, creating a low supply. As the FED continues to increase rates, we will see this pattern increase.
- The Bay Area Rapid Transit District (BART), San Francisco's transit system, was downgraded by S&P Global Ratings as ridership lingers below pre-Covid levels. The transit agency, which operates in five California counties, saw its long-term rating on general-obligation bonds lowered by two notches to A+ from AA on Thursday. S&P has a negative outlook on BART's credit score, indicating at least a one-in-three chance of another downgrade within the next two years. I think we will continue to see downgrades across California.
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