Municipal Bonds Show Improvement
Munis firmer out long, see monthly and yearly gains, as the technical picture tends to turn "more favorable" during November and December.
The wider new issue concessions brought about via the heavy new issue calendar will likely be rewarded.
On Tuesday, munis were firmer out long, with USTs richening 10 years and in, and equities ending mixed. The muni-UST ratios were:
- two-year at 67%
- five-year at 65%
- 10-year at 70%
- 30-year at 90%
Munis continued their underperformance last week, led by front-end weakness. The front end saw 2026-2029 maturities experience a two to five basis point cut, while the rest of the curve saw yields bumped one to five basis points, said Jason Wong, vice president of municipals at AmeriVet Securities.
Author's summary: Munis show improvement in November and December.