- The FED Reserve Bank of Atlanta president indicated he favors slowing the interest rate increases with no more than 100bps of hikes while trying to ensure the investing public will have a soft landing. Should the economy proceed as he expects, Bostic indicated 75-100bps move tops should be enough to conclude the tightening. "It is clear more is needed, and I believe this policy rate level will be sufficient to rein in inflation over a reasonable time horizon," he indicated.
- Barclays is one of the few firms calling for a slightly more significant increase in MUNI bond underwriting in 2023, predicting $400-$420B total issuance. This change is up about $50B from other large firm estimates. We see issuance increase slightly for 2023 due to what many expect to be a lower interest rate environment.
- Visible supply begins the holiday week at $1.9B, the lowest of the year; however not surprising due to the holiday. To put it into perspective, the average for the year has been $10.4B.
- General FED notes indicated the October durable goods report might show more significant momentum in transportation and defense components than in other subsets. Narrow strength would continue a trend seen in the 3Q GDP report, where the leading contributors were equipment spending on aircraft and light trucks. Conditions in the labor market remain tight; however, many expect more layoffs in the months ahead, ultimately pushing the unemployment rate to 4.9% by 2024.
- MUNI trading is setting an annual record, surpassing the previous high set in 2008. The number of trades reported to the market's self-regulators stood at 10.88MM as of the close of business Wednesday this week.
- Many think T bills could be poised to continue rallying if the market prices for a late 2023 recession, which is the base case for many economists suggesting the T index returns should be positive for next year. However, what becomes of the T bills to the stock relationship? Should we have a recession, I suspect the long end of the T markets will rally, and equities, in theory, should sell off. MUNIs should continue to rally as well if this happens.
- S&P Global Ratings upgraded Connecticut's bond rating amid strong revenue collections. The rating company raised the state one notch to AA- citing improved finances. We have discussed this point frequently, that many states are in great shape from a financial point of view. I suspect you will continue to see this type of action through 2023.
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