- We have been saying for years that Chicago will continue improving financially and from a credit structure. Our clients have been buying Chicago bonds for years, and we have never wavered from the aspect that the city will be built back, better and cleaner over the years. As of this week, Chicago has shed its junk status for the first time in more than seven years, marking a significant win for the city. Moody's raised the city's rating by one notch to Baa3, freeing Chicago from its one non-investment grade rating for the first time since 2015.
- Cities such as Chicago and NY will continue to gain traction from the rating agencies due to the contributions to internal infrastructure, pension contributions, and a boost to the overall "cash on hand" as we move through next year. Many cities which were questionable during COVID are on a path to financial stability/recovery. We have indicated to our clients and prospects that municipalities are in good shape and will continue to prosper as we move through the year and into 2023, making the Muni debt we trade stable and secure.
- Overall sales tax revenue increased 12% to $32B in September from the same month in 2021. This data is compiled from 37 states. Surprisingly North Dakota rose the most, up 32%; George fell the most, down 9.67%. This point goes back to my earlier statement that overall, we will continue to see this growth making our markets stable and a great asset class for investing.
- As we have seen, MUNIs have rallied over the past few days, with yields poised for the most significant drop in a week as state and local government debt joined in a broader market rally. Top-rated 10-year yields fell 3bps to 3.31%, while those on the longest-dated bonds also decreased by ~3bps. I suspect we will have continued strength and agree with many economists who expect CPI numbers to move down slightly as we move through the balance of the year.
- US futures fell today, 11/9, as midterm elections threw up a mixed verdict, challenging expectations for a Republican sweep and a Congress gridlock. Republicans appear to likely win the House, which will be a perch to block Biden's legislative agenda; however, the Senate will be a more difficult matter as Republicans have not yet flipped the seats. Whatever the outcome, it will be narrow, making it difficult for the current administration's agenda.
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