Municipal Securities Rulemaking Board

MSRB today published a new research report that analyzes trading and pricing trends in the municipal securities market, comparing the primary market to the recently issued market, and the competitive market to the negotiated market. The authors found that smaller size trades paid a higher premium over initial offering prices in the first seven days of trading than larger size trades. They also found that for trades of all sizes, premiums for recently issued bonds were higher for negotiated issues than for competitive issues. Learn more: https://lnkd.in/e3kKhg6f

As the chart below shows, interest rates on the short end of the tax-exempt and Treasury markets declined last week as hopes for a rate cut from the Federal Reserve rose. However, results in the intermediate and long end of the tax-exempt market were mixed. New issuance this week is expected to be about $9 billion, including $2.6 billion of California General Obligation bonds. To see current and historical tax-exempt and Treasury yields, visit EMMA. https://lnkd.in/gqYjtcfD

Demand for municipal securities from individual investors remains strong and consistent as shown in the graph below. New issue volume is expected to rise this week after last week’s light volume due to the release of CPI and PPI data. To see deals expected to come to market, visit the New Issue Calendar on EMMA. https://lnkd.in/dKpYX5H

Fixed income markets have seen a significant increase in volatility since the end of July. As shown below, benchmark 10-year tax-exempt yields dropped from 2.75% to below 2.5% between July 31 and August 5, but then reversed course and rose above 2.65% by August 9. This week, tax-exempt yields are likely to be impacted by inflation reports when PPI and CPI for July are released on Tuesday and Wednesday. See current and historical tax-exempt and Treasury yields on EMMA. https://lnkd.in/gqYjtcfD

Last week tax-exempt municipal bonds continued their underperformance of Treasurys, with tax-exempt yields down 17-19 basis points while Treasury yields plummeted 34-50 basis points. The Muni/TSY ratio has risen for all maturities since the end of 2023. This week, the market braces for one of the largest weeks for new issuance, with estimates of $13-$15 billion coming to market. To see current and historical tax-exempt and Treasury yield curves, visit the Yield Curve and Indices section of EMMA: https://lnkd.in/gqYjtcfD. 

The MSRB has elected three new Board members for Fiscal Year 2025 to serve four-year terms beginning October 1, 2024. The Board includes eight public members and seven regulated members. Read the press release to find out more: https://lnkd.in/eMqAs68u

Fixed income markets rallied yesterday on weaker than expected economic news. Ten-year Treasury bonds closed at 3.99%. The last time the 10-year Treasury closed below 4.00% was February 1 of this year. Yields are down again this morning to 3.86% on a weaker than expected jobs report. Benchmark tax-exempt muni yields are down to levels last seen in May. To see current and historical benchmark yields, visit the Yield Curve and Indices section on EMMA. https://lnkd.in/gqYjtcfD  

In July, tax-exempt and Treasury yields reversed the year-long upward movement in interest rates, especially in the short end of the market. This reversal was driven by increased confidence in the potential for a rate cut by the Federal Reserve Board in September. Go to the Yield Curve section of EMMA to see current and historical tax-exempt and Treasury yields. https://lnkd.in/gqYjtcfD

Trade count in July exceeded 1.2 million trades bolstered by strong demand from individual investors. Year-to-date, trade count is up nearly 24% compared to 2023. See statistics on trade count and par amount traded in the Overall Trade Pattern Section under Market Statistics on EMMA. https://lnkd.in/eZEpAtsz

MSRB hosted its 12th Muni Finance Day in partnership with the Municipal Forum of New York’s Urban Leadership Fellows Program for New York City students interested in careers in public finance. Students met with industry leaders, regulators and Capitol Hill staff who shared their personal stories and career advice. We thank our accomplished speakers for sharing their insights and perspectives. Learn more: https://lnkd.in/eHadBBRM