Strong demand from investors pushed long-maturity municipal yields lower

AllianceBernstein
Door mei 1, 2019 15:02

Strong demand from investors pushed long-maturity municipal yields lower

Strong demand from investors pushed long-maturity municipal yields lower over the week while Treasury yields were unchanged. Over the past month, long-term municipal yields are unchanged, while Treasury yields have risen 13 b.p. 

Why it matters: The volume of municipal bonds outstanding is expected to shrink modestly this summer, as the volume of maturing and called bonds is likely to be larger than new-issue supply. A lack of supply should continue to support municipal bond prices, just as it has over the past month. 

The economy grew an estimated 3.2% in the first quarter, which was almost 1% more than expected. At the same time, inflation remained low, as evidenced by the soft 0.9% GDP deflation print.  

Why it matters: Positive economic growth with low inflation makes a constructive environment for the creditworthiness of most municipal issuers; we expect to see more upgrades than downgrades in municipal credit ratings for 2019. Moreover, it’s an environment that will likely keep monetary policy unchanged for the foreseeable future, which is also good for municipal bond investors.  

AllianceBernstein
Door mei 1, 2019 15:02

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