Broker Check

Market News & Commentary - From The Desk Of David Loesch 10.05.23

October 05, 2023


  • Investors worldwide experience frustration when they incur losses, but individual retail investors in the $4 trillion municipal bond market often compound the distress by collectively selling their holdings simultaneously. We see his pattern often, but it has been so exaggerated this year. The extreme selling is because of what happened in 2022 when the bond market lost so much ground. Also, these recent moves have been so aggressive that they increase the level of fear.
  • Trading in the municipal bond market has experienced a significant increase this week, driven by a surge in benchmark yields to their highest levels in over a decade. This development has led to a wave of activity in what is typically a stable market. According to data from the MSRB, Tuesday saw more than 70,000 trades executed, marking the busiest day of the year. This volume represents an approximately 40% increase compared to the daily average observed over the past 12 months.
  • Primary market: The most significant sales expected to price today include a $519.6 million issue for Fort Lauderdale, FL, and $197.4 million in Alameda County, CA, Joint Powers Authority Rev. These deals are smaller than we have seen in the last few weeks. Recent FED comments have added pressure to the municipal primary market, leading several government entities to delay their bond sales.
  • In the secondary market, the most traded issues have been 5% coupons in the last few weeks.
  • The 30-year US Treasury yield reached 5% for the first time since 2007. This point could indicate a FED pause in November and another rate hike in December; it's too early to tell.
  • Bank of America Corp. informed investors on Friday that affluent residents of New York City currently stand to generate higher returns by investing in the city's municipal bonds compared to corporate debt. For taxable bonds to be competitive with the yield provided by New York muni bonds, they would need to yield 8.9% (for those in the highest tax bracket). Because of the eye-opening tax-free returns Munis offer, we encourage investors to run the taxable equivalents; they are impressive!

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.

David Loesch

dloesch@drlgroup.net

www.drlgroup.net

605-B Park Grove

Katy, TX 77450

866.664.4040 (toll-free)

281.398.8600 (direct)

 

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´╗┐Bonds could also be subject to the De Minimis Rule; please consult your tax advisor for further clarification.

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