- As we went through a bearish month in October, now we see a turnaround, and buyers are coming back into the marketplace. The $4T MUNI market is off to its strongest week since July. In addition, the flood of cash seeking a home has picked up again, and buyers have re-emerged into our markets. The tone and buying patterns are better; even with the past three months of lackluster gains, MUNIs are still beating other fixed-income asset classes.
- With Congress indicating they will raise taxes on higher wage earners, I suspect we will see additional cash pour into our markets over the next two months in preparation for tax increases in 2022. For now, stability across debt markets has been enough to revive investor appetites. Last week's MUNI rebound coincided with increased retail interest, and investors added about $603MM to funds.
- Federal Reserve Governor Lael Brainard was interviewed for the top job at the FED yesterday, signaling Biden’s indecision on reappointing Powell for his upcoming term. It is too early to consider this issue, but it will rattle markets with an unexpected change.
- The Infrastructure and Jobs Act will boost the MUNI market and support credit quality for states and cities. The DRL Group continues to discuss this with clients daily. These projects will likely boost municipalities and target transportation, water, sewer, and energy. I would expect upgrades coupled with improving credit qualities which should result in higher pricing and less demand.
605-B Park Grove
Katy, TX 77450
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