Tag: Christine Albano

Munis sit on sidelines while USTs rally post-Fed rate hike

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202206151637SM______BNDBUYER_00000181-67cc-d98e-a5fb-efcf1bfc0001_110.1

Excerpt:

Municipals took a backseat as the Federal Open Market Committee announced its decision to implement a three-quarter point rate hike while U.S. Treasuries rallied into late afternoon following the news. Equities rallied.

The move, prompted partly by hotter-than-expected inflation data Friday, is the largest rate hike since 1994.

?Investors appear encouraged that the FOMC is willing to take forceful action to try and get inflation under control,” Wilmington Trust Chief Economist Luke Tilley said.

By front loading rate hikes, he said, the FOMC will have ?more optionality as the year unfolds,? and will be able to accelerate hikes if inflation persists, ?but if any cracks appear in the economic recovery they?ll have the option to slow down while still having rates below their estimate of neutral.?

Triple-A muni yields were cut a basis point or were little changed while UST yields fell up to 23 basis points on the short end.

Author(s): Christine Albano

Publication Date: 15 June 2022

Publication Site: Fidelity Fixed Income

Munis end with largest increase in yields in a week since COVID-induced turmoil

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202102191549SM______BNDBUYER_00000177-baa7-d4af-a9f7-bfb72adb0001_110.1

Excerpt:

Municipals ended weaker Friday with triple-A benchmark curves rising the most in a week since COVID-19 disrupted all markets in March and April of last year.

Muni yields rose another five basis points on the 10- and 30-year Friday, bringing the total cuts to scales to 18 and 17 basis points, respectively, from Tuesday as the asset class moved closer to U.S. Treasury movements after lagging weakness in taxables since the start of the year. Treasury yields hit 1.35% in 10-years and 2.15% in 30 after news of stimulus out of Washington gaining ground.

“In the past several days, tax-exempts have finally started to react, and while it remains to be seen if the adjustment will be minor or a bigger move, an overall defensive portfolio stance is warranted,” said Mikhail Foux, municipal strategist at Barclays (BCS). “At the current extremely low ratios, one could consider whether to buy extremely rich high-quality tax-exempts or simply purchase Treasuries instead, which even accounting for the tax-exemption make more sense, especially for short and medium-dated bonds.”

Author(s): Christine Albano

Publication Date: 19 February 2021

Publication Site: Fidelity Fixed Income