Wednesday, November 4, 2020 |
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| MANAGING DIRECTOR: Scott Carrithers PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Kevin Doyle • Lonnie Harris • Mark Tranckino • Robert Schuyler • Tom Toburen Josh Kiefer • Nicole Burczyk • Natalie Regan • Aaron Stoffer • David Farris |
| 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 |
| 10/28/20 | 0.07 | 0.10 | 0.11 | 0.12 | 0.16 | 0.19 | 0.34 | 0.56 | 0.79 | 1.34 | 1.56 |
| 10/29/20 | 0.08 | 0.09 | 0.10 | 0.12 | 0.16 | 0.20 | 0.38 | 0.61 | 0.85 | 1.39 | 1.62 |
| 10/30/20 | 0.08 | 0.09 | 0.11 | 0.13 | 0.14 | 0.19 | 0.38 | 0.64 | 0.88 | 1.43 | 1.65 |
| 11/02/20 | 0.09 | 0.09 | 0.11 | 0.13 | 0.16 | 0.20 | 0.38 | 0.63 | 0.87 | 1.41 | 1.63 |
| 11/03/20 | 0.09 | 0.10 | 0.12 | 0.14 | 0.17 | 0.21 | 0.39 | 0.65 | 0.90 | 1.44 | 1.66 |
Municipal Issuance: Supply & Demand
Citigroup municipal analysts announced last week that the volume of November bond sales will total only 17.4 billion dollars as compared to 62.0 billion dollars of issuance in October. This is largely due to state and local governments pulling deals forward into October rather than issuing during election week and Thanksgiving week as was originally planned.
A supply imbalance such as this could have pricing ramifications as November unfolds. It is estimated that the total amount of cash flows coming back to investors in November from bond calls, maturities and interest payments will approximate 47.3 billion dollars – or 29.9 billion more than the 17.4 billion dollars set to be issued.
Economics 101 teaches us that any time demand exceeds supply, prices have a tendency to rise. If your portfolio has dollars to commit to the municipal market in November, it’s probably a better time now to be looking, after a heavy October of issuance, than waiting until later in the month when yields could potentially be driven lower simply by supply and demand.
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