- Fed minutes for June suggest progress toward a taper move. Minutes noted that uncertainty around economic outlook was elevated and that it was too early to draw firm conclusions about the paths of the labor market and inflation. Officials showed an outlook for prices by indicating two interest-rate hikes for 2023, while 7 of 18 officials wanted to raise interest rates next year.
- S&P rating service has raised the outlooks on about $403B municipal bonds this year and upgraded nearly $38B. That is a reversal from last year when they lowered the outlook on $434B and downgraded $79B. They expect this trend to continue for the rest of the year.
- Chicago is planning to close on a $400M interim line of credit and finalize about $300M in short-term borrowing for O'Hare during the third quarter.
- The State of Illinois's credit ratings was upgraded by Moody's to Baa2 from Baa3. This increase is supported by material improvement in the state's finances and the influx of federal aid.
- Muni ETFs keep seeing an increase in cash flow; this should continue through the summer.
- FINRA fined Robinhood for $70M for misleading customers and technology malfunctions last March 2020. This fine is the largest-ever FINRA penalty.
- The Mayor of NYC and the City Council agreed to a $98.7B budget for the pandemic recovery. I think this will be good for NY paper overall.
- The State of California has $628B in residential property value at a high risk of fire. This number is the highest of all states. Almost 40% of the acreage burned last year was in California. Sellers in CA are rushing to get under contract before the fire season is here.
- Vanguard and BlackRock Muni ETFs are seeing unprecedented amounts of cash flowing into the funds, a record $5.8B of inflows in the second quarter, $11B for the year. I think we will continue to see this as Biden pushes to raise taxes.
- The cost of renting a home is increasing in cities across the US. The median national rent climbed 9.2% in the first half of 2021. While part of the increase is a bounce-back from the drop during the pandemic, real-estate firms say rents are now higher than if they had stayed on their pre-covid track. Higher rents are the kind of price increases that are hard to reverse, unlike lumber or used cars. These types of increases could mean a more significant challenge to the Fed's view that the current spike in inflation will be transitory.
- US service providers expanded in June by less than forecast while employment contracted. Employers keep struggling to attract workers in industries like hotels and restaurants.
David Loesch
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