Weekly Muni Commentary
September 25, 2023 | Q3
Daily Avg. Offering Line Items
Daily Avg. Notional Offered
CUSIPs Offered on TWD
Dealers Offering on TWD
Buy/Sell Ratio Trend
Bid Wanted Flow
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Happy Monday!
As investors expected, The Fed held rates steady at 5.25-5.5% during their September meeting last week. Jay Powell’s hawkish message to the market was that rates will stay elevated until inflation moves toward the 2% target, including the potential for another rate hike this year. The Fed’s projection for rates next year now include fewer potential cuts. The Fed’s “dot plot” predicts Fed funds rates at 5.1% in 2024, 3.9% in 2025, and 2.9% in 2026. Additional projections from the Fed include modest economic growth of 1.5% for 2024 before increasing to 1.8% in 2025. Fed unemployment estimate of 3.8% for the end of 2023, well below the ten-year average of 5.0%. the 2yr and 10yr treasury yields increased in response to news that rates will stay elevated longer with the potential for a government shutdown on October 1st. A government shutdown would result in paused paychecks for millions of federal employees and a pause in many government services.
Last week municipal bond prices dropped and yields increased across the curve as investors digested the Fed news. The TW AAA municipal curve saw the 10yr pickup 11bps in yield for the week. Lipper reported $27 million of redemptions from municipal mutual funds for the week ending 9/20.
The TW 10yr AAA municipal / treasury ratio closed Friday at 72.8%, up from 71.8% on September 15th. This week’s new issue calendar looks to be around $6.5 billion with sizable deals coming from Texas Water ($1B), Florida Dev. Finance ($770 million), and NYC Muni Fin. Authority ($630 million).
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Proportion of muni buys vs. sells by client type on the TWD platform.
For the avoidance of doubt, a ratio < 1 indicates net selling activity.
Relative number of bid wanted requests sent to the TWD platform by client type, indexed to the first month in the time series.
Number of municipal inventory line items available on the TWD platform daily by liquidity provider type.
Municipal notional (000s) offered on the TWD platform daily by liquidity provider type.
Number of unique municipal CUSIPs offered daily on the TWD platform daily.
Number of unique liquidity providers offering municipals daily.
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