CREDIT AND MARKET STRATEGY
MUNICIPAL MARKET WEEKLY
June 18, 2018
Municipals posted small gains and underperformed Treasuries last week, which despite a Fed rate hike mid-week and CPI being in-line with expectations, benefited from risk-off sentiment caused largely by a dovish ECB announcement and a potential US-China trade war. Muni new issue supply was...
Rates markets last week were influenced by geopolitics and trade tensions, good economic data, and two key central bank meetings. The week began with the vaunted Trump-Kim Summit in Singapore that was held without incident and where North Korea announced a gradual end to its nuclear weapons program. Tuesday had the release of May CPI, which indicated...
Treasury 2s30s bull flattened -9 bps to 49 bps as the 2yr T-bill yield rose +2 bps to 2.54% largely due to the...
In other Muni news, we have “Cal-3,” a state ballot initiative to split the State of California into three separate states. The Cal-3 petition...
Gross new issue supply this week at $7.77 bil. is about +11% above the 12-week moving average of $7.0 bil., with negotiated transactions representing $5.15 bil., or 66% of the total. The negotiated market is led by $1.7 bil. Golden State Tobacco (CA) and $490 mil. PA Turnpike, which are both pricing on...
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SAMUEL A. RAMIREZ & COMPANY, INC.
QUARTERLY MACROECONOMIC OUTLOOK
FINANCIAL STRATEGIES GROUP – 1st QUARTER 2018
Please find attached Ramirez & Co.’s Quarterly Macroeconomic Outlook. In our report, we continue to monitor the US economy, global events and the Fed’s outlook on the economy and rates:
- Threats of trade wars and actual wars rattle markets, with the S&P 500 and Dow Jones hovering around correction territory. Market stress indicators spike but then settle down at slightly heightened levels.
- The markets, primary dealers and Fed economists show small divergence regarding forecasts of the Fed Funds rate for 2018. Primary dealers generally see three remaining hikes, the markets two or possibly three hikes, and the Fed economists just about split on two or three hikes.
- The US Treasury yield curve flattens significantly since December 2015, as the Fed raises its target rate six times, but with little change in 30Y bond yields. Corporate spreads during this time also tighten to near pre-crisis levels. However, as turmoil hits the markets, longer-term rates decline slightly from recent highs and spreads widen slightly. In the long term, primary dealers forecast continued flattening.
Members of our Financial Strategies Group, Niso Abuaf, Konstantin Semyonov and Duncan Sinclair, would be happy to discuss further any of the material with you.
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