Tuesday, November 28, 2017
MANAGING DIRECTOR: Scott Carrithers   PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Robert Brickson • Kevin Doyle • Lonnie Harris •  Mark Tranckino • Robert Schuyler  Tom Toburen • Josh Kiefer • Nicole Burczyk • Kelley Frye • Natalie Regan • Aaron Stoffer • Chuck Honeywell

US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
11/20/17	1.09	1.30	1.46	1.62	1.77	1.86	2.09	2.26	2.37	2.60	2.78
11/21/17	1.15	1.30	1.45	1.62	1.77	1.88	2.11	2.27	2.36	2.58	2.76
11/22/17	1.16	1.29	1.45	1.61	1.74	1.84	2.05	2.22	2.32	2.57	2.75
11/24/17	1.14	1.29	1.45	1.61	1.75	1.85	2.07	2.23	2.34	2.58	2.76
11/27/17	1.15	1.27	1.41	1.62	1.74	1.84	2.06	2.21	2.32	2.57	2.76

                                                                                                                                         Source: U.S. Department of the Treasury, as of 11/27/17  

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                                                          Supply and Demand

   Normally, the week after Thanksgiving is a pretty sleepy time in the fixed income world. Investors are usually either recovering from Holiday indulgence or slipping in a few extra days of vacation. This week, and every remaining week of the year are likely to be influenced by possible tax reform, with issuers racing to market before any possible changes are final.

  Under the House version of reform, the tax-exempt financing of stadiums, tax credit bonds, advance refundings and tax-exempt private activity bonds would all be eliminated. Under the Senate plan, only advanced refundings would be eliminated. This week should decide what, if any final versions, will be agreed upon.

  There has been talk that there might be a compromise of retaining advance refundings but limiting them to small issuers, meaning those who borrow less than $50 million a year. This would be reminiscent of the “bank qualified” exception that has been in place since the tax code change of 1986. When it comes to issuers of debt, few are taking any chances of favorable treatment. The municipal issuance calendar between now and yearend is becoming full.   The number of sales planned for the next 30 days has swelled to $22.3 billion, the most since October 2016.

  So from a simple supply and demand basis, the next 40 days might very well be the best buying opportunity in the municipal market place for some time to come. One traditional example of municipal value would be yields of over 100 percent of Treasuries. The following would be an example:

550,000 Aa2 rated Maryland Heights Fire Protection District G.O.’s.

2.50% coupon due 3-1-2029 callable 3-1-2025. 2.30% YTC and 2.365% YTM are both over 100 percent of Treasuries.

Source:  Bloomberg, 11/27/17

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value