FMNY - Value Being Restored In Municipals
2024-06-14 13:10:00 ET
Summary
- We maintain a barbell yield curve strategy, but are cognizant that intermediate bonds present more value post-correction.
- Issuance remained robust and increasingly pressured the market late in the month.
- We have started to selectively add duration but see several reasons to remain patient.
Market Overview
Municipal bonds deviated from their U.S. fixed income counterparts and posted negative performance in May. Weakening economic data, particularly early in the month, pushed interest rates lower, despite mixed messaging from the Federal Reserve. However, municipals underperformed comparable Treasuries, as the market struggled to absorb a deluge of issuance at historically tight valuations. The S&P Municipal Bond Index returned -0.24%, bringing the year-to-date total return to -1.40%. Barbell yield curve strategies and the high-yield sector performed best....
Value Being Restored In Municipals