Municipalities capitalizing on lower rates and a rush to market before the year-end have created a heavy underwriting calendar for the second week. Also, municipalities have not had to come to market as often in the last few years due to COVID-19 funds.
Levels this week are at an attractive entry point for new Muni bond buyers and an opportunity to add additional yield to current positions. Bond deals have been attractively priced to gain investor interest. The supply should be lower next week due to the election.
This month, AAA Muni yields are up across the curve, 40bps on the short end, 45bps on 10 years, and 33bps higher on the 30-year. In addition, six-month Treasury yields have moved from 5.53% to 4.483% in the past year, as I write. The 30-year levels have gone from 5.04% to 4.503% over the same period.
With concerns about the city’s pension and debt, Chicago Mayor Brandon Johnson is proposing a $300 million property tax increase to address an almost $1 billion budget shortfall for 2025, all while being conscious not to damage the city’s recent rating upgrade.
NY City area airports had their busiest September on record, with 11.9 million passengers, as commercial travel continues its post-pandemic recovery. The Port Authority of NY and NJ reported that year-to-date passenger traffic reached approximately 109.7 million through September—1.5 million more than in 2023, a record-breaking year. This activity is good news for airport bonds and specifically the NY Port Authority; after the pandemic, we remained cautious on this type of paper as the revenues were not in line with expectations. We are seeing normal activity, which helps stabilize those issues.
LA Governor Jeff Landry is calling lawmakers into a 20-day special legislative session starting November 6th to address his plan for revamping the state tax code. The session will focus on overhauling major revenue sources, including personal and corporate income taxes, sales taxes, and various tax credits. Any changes would affect the perception of the state in the short term as budget numbers come out and show where the state stands in the area.
The Bottom Line:
November will be a month of managing headwinds, but it also presents exciting opportunities for retail bargain hunters. The pending election, macroeconomic matters, a heavy fixed-income underwriting calendar, and Fed rate-cut decisions will all have investors on the edge of their seats. While inflation moderates, the potential for Fed Rate Cuts may be muted. With heavy Muni’s new issuance, underwriters are pricing deals to move, which is a perfect environment for bargain hunters. Also, reinvestment funds coming into the market in November and December should support the extra supply. All said, the opportunity exists for those on the investing sidelines. We invite you to let us use our decades of fixed-income experience to benefit you today and take advantage of the pull-back.
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.
David Loesch
[email protected]
www.drlgroup.net
605-B Park Grove
Katy, TX 77450
866.664.4040 (toll-free)
281.398.8600 (direct)
Securities are offered through New Edge Securities, Inc., a registered Broker-Dealer, FINRA and SIPC member. The DRL Group is not a subsidiary or control affiliate of New Edge Securities, Inc.New Edge Securities, Inc. has no affiliation with Bond Desk Trading LLC, Bond Trader Pro, Tradeweb Direct, Bondpoint, TMC, or any other ECN.
Do not buy discount bonds based on the Yield-to-Call (YTC). YTC does not indicate total return; this yield is valid only if the security is called. Bonds may be callable on multiple dates or 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). Bonds could also be subject to the DeMinimis Rule; please consult your tax advisor for further clarification. Insured bonds are issued for timely principal and interest payment only, do not cover potential market loss, and are subject to the insurance company’s claims-paying ability. Municipal income may be subject to state, local, and Alternative Minimum Tax (AMT) taxation. Corporate and Municipal securities are subject to gains/losses based on the level of interest rates, market conditions, and credit quality of the issuer. 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.
Prices and availability may change without notice at any time. The securities described herein may not be eligible for sale in all jurisdictions or to specific categories of investors.
This summary is for informational purposes only and is not an offer or solicitation to purchase, sell, recommend, or endorse any security or issuer. New Edge Securities, Inc. and DRL Group do not represent this information’s accuracy, completeness, or timeliness.
This report does not regard any recipient’s specific investment objectives, financial situation, or needs and is based on information obtained from sources believed to be reliable. No independent verification has been made, nor is its accuracy or completeness guaranteed. 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. NewEdge Securities, Inc. accepts no liability for any loss or damage of any kind arising out of the use of this report. Contact your tax advisor regarding the suitability of tax-exempt investments in your portfolio.
Reminder: E-mails sent through the Internet are not secure. Do not use e-mail to send us confidential information such as credit card numbers, change of address, PINs, passwords, or other important information. Do not e-mail orders with time-sensitive instructions. This e-mail is not an official trade confirmation for transactions executed for your account. Your e-mail message is not private; it is subject to review by the firm, its officers, agents, and employees. Unless expressly stated in this e-mail, nothing in this message should be construed as a digital or electronic signature.
Call us at 281-398-8600 to invest in these or any of our other offerings today.
