National Market Update Week of January 21, 2019 0
bps (%) Market Update * Commentary for the week of January 21 st U.S. government bond prices fell Friday after the Federal Reserve released data which indicated U.S. industrial production, a measure of factory, mining and utility output, increased 0.3% in December. The report brought some ease to recent investor concerns about economic slowdown and the pace of rate hikes. New York Fed President, John C. Williams, mentioned Friday at the New Jersey Bankers Economic Leadership Forum The economy is strong, the outlook is healthy, and my number one priority is using monetary policy to keep it that way. Furthermore, 99.5% of market participants anticipate the central bank will leave interest rates unchanged on January 30th. The current Federal Funds target range is 2.25% to 2.50%. On Friday the 10-year and 30-year Treasury yield rose three and two basis points to 2.78% and 3.10%, respectively, from Thursday s close. Furthermore, the 10-year and 30-year AAA Municipal yield gained one and two basis points to 2.21% and 3.06%, respectively, from Thursday s close. Municipal volume for this week is estimated to be $5.1 billion, down from the revised total of $6.59 billion of the previous week. The primary municipal calendar is comprised of $3.6 billion of negotiated deals and $1.5 billion in competitive sales. MMD to Treasury Ratios 125% 10Y MMD/10Y Treasury Ratios 20Y MMD/20Y Treasury Ratios 30Y MMD/30Y Treasury Ratios MMD Rates AAA 10 Y AAA 20 Y AAA 30 Y 3.50 2.50 1.50 1.00 AAA MMD to BBB MMD Spreads 10Y AAA vs BBB MMD Spread 110 20Y AAA vs BBB MMD Spread 30Y AAA vs BBB MMD Spread 100% 85 75% 60 Source: * Bond Buyer Municipal Market Data Thomson Reuters TM3 1
($bn) Market Update Calendar Week of January 21 st Issue Description Sale (week of) Par Amount ($000) Moody's S&P Fitch State of CT Health and Edu Fac Auth - Rev Bds, Ser. S, Ser. U-1 and U-2, Ser. 2010A-4 1/21 $ 535,865 Aaa AAA NR NJ Turnpike Auth - Turnpike Rev Bds, 2019 Ser. A IA Fin Auth - State Revolving Fund Rev Bds, Ser. 2019A and B City and Co. of Honolulu, HI - G.O. Bds, Ser. 2019A and B Co. of Miami, OH - Hosp Fac Improv and Ref Rev Bds, Ser. 2019 1/21 $ 426,000 A2 A+ A 1/21 $ 258,970 Aaa AAA AAA 1/21 $ 250,340 Applied For NR Applied For 1/21 $ 198,980 A2 A+ NR OH Hsng Fin Agency - 2019 Ser. A 1/21 $ 150,000 Aaa NR NR Abilene ISD, TX - U/L Tax Schl Bldg Bds, Ser. 2019 Board of Regents of Stephens F. Austin State Univ, TX - Rev Fin Sys Bds, Ser. 2019A and B(Taxable) Lake Travis ISD, TX - U/L Tax Schl Bldg Bds, Ser. 2019 1/21 $ 133,385 Aaa AAA NR 1/21 $ 109,385 A1 NR AA 1/21 $ 100,000 NR Applied For Applied For Marin CCD, CA - G.O. 2016 Election 2019 B-1 1/21 $ 97,500 NR NR NR National Top 10 Total Negotiated Supply $ 2,377,745 National Total Negotiated Weekly Supply $ 3,666,500 Ratings* Bond Buyer 30-Day Visible Supply** Bond Buyer 30 Day Visible Supply Bond Sales Volume 60 50 40 30 20 10 0 AAA MMD yield curve*** Jan-18 5.00 Dec-18 Jan-19 1.00 Thru 1/25/2019 Thru 1/26/2018 Thru 1/27/2017 Thru 1/29/2016 Total National Supply YTD $19,620,800 $14,413,000 $26,479,400 $25,725,100 0.00 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Year *Rating reflects underlying or insured rating, as appropriate **Source: Bond Buyer ***Source: Municipal Market Data 2
Bond Buyer Indices vs. 30 Year Treasury: 30 Year History 1 BB 11 GO Index BB Revenue Index 10.00 30 Year Treasury 8.00 6.00 BB 11 GO Index BB Revenue Index 30 Year Treasury High 9.05 9.59 10.20 Low 2.39 2.98 2.11 Average 4.64 5.26 4.89 Current 3.68 4.66 3.10 0.00 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Source: Bond Buyer 3
bps (%) (%) Tax-Exempt and Treasury Spreads: 1 Year History Bond Buyer Indices vs. 30 Year Treasury 5.00 BB 11 GO Index BB Revenue Index 30 Year Treasury 4.50 MMD Rates 3.50 AAA 10 Y AAA 20 Y AAA 30 Y 2.50 3.50 1.50 2.50 MMD to Treasury Ratios 1.00 AAA MMD to BBB MMD Spreads 115% 105% 10Y MMD/10Y Treasury Ratios 20Y MMD/20Y Treasury Ratios 30Y MMD/30Y Treasury Ratios 10Y AAA vs BBB MMD Spread 20Y AAA vs BBB MMD Spread 30Y AAA vs BBB MMD Spread 90 95% 85% 75% 75 Source: Municipal Market Data Thomson Reuters TM3 Bond Buyer 4
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