- 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.
605-B Park Grove
Katy, TX 77450
New Edge Securities, Inc. has no affiliation with Bond Desk Trading LLC, Bond Trader Pro, Tradeweb Direct, Bondpoint, TMC, or any other ECN. Yield to call (YTC) does not indicate total return; this yield is valid only if the security is called. Bonds may or may not be called or be callable on multiple dates or, in other cases, called on any date following the first call date, so yield to call is based on the earliest stated call date. Discounted bonds may be subject to capital gains tax. Bonds may be subject to OID (Original Issue Discount). Prices and availability may change at any time without notice. Do not buy discount bonds based on the Yield to Call (YTC). Insured bonds are issued for timely payment of principal and interest only. Insured bonds do not cover potential market loss and are subject to the insurance company's claims-paying ability. Non-rated (NR), With-Drawn (WR), or below investment grade bonds, lower-rated bonds carry a greater potential risk of default & should be considered by sophisticated investors only. Bonds may be subject to capital gains tax. This summary is for informational purposes only and is not an offer or solicitation for the purchase or sale of any security or a recommendation or endorsement of any security or issuer. New Edge Securities, Inc. and DRL Group make no representation about the accuracy, completeness, or timeliness of this information. Bonds could also be subject to the DeMinimis Rule; please consult your tax advisor for further clarification.
As with any investment, the market value may vary during the period the investment is held. Subject to prior sale and market conditions. This offering is in limited quantity. Please take advantage of them before they are gone.
This report does not regard any particular recipient's specific investment objectives, financial situation, or needs. This report is based on information obtained from sources believed to be reliable, but no independent verification has been made, nor is its accuracy or completeness guaranteed. This report is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Opinions expressed herein are subject to change without notice. The division, group, subsidiary, or affiliate of NewEdge Securities, Inc., is under no obligation to update or keep the information current. The securities described herein may not be eligible for sale in all jurisdictions or to specific categories of investors. NewEdge Securities, Inc. accepts no liability for any loss or damage of any kind arising out of the use of this report. Please contact your tax advisor regarding the suitability of tax-exempt investments in your portfolio. Municipal income may be subject to state and local taxes and the Alternative Minimum Tax. Corporate and Municipal securities are subject to gains/losses based on the level of interest rates, market conditions, and credit quality of the issuer. As with any security, there is an inherent market risk possibility as to principal if the security is not held to maturity. Non-rated bonds (NR) should only be considered for investment by knowledgeable and sophisticated investors. Additional information will be made available upon request.
Securities are offered through NewEdge Securities, Inc., a registered Broker-Dealer, and member of FINRA/SIPC.
The DRL Group is not a registered entity, subsidiary, or control affiliate of NewEdge Securities, Inc.
Bonds are subject to market and interest rate risk if sold before maturity. Prices and availability may change at any time without notice. Insured bonds are subject to the claims-paying ability of the insurance company.
Bonds could also be subject to the De Minimis Rule; please consult your tax advisor for further clarification.
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