Municipal Market Update | March 2024
The municipal bond market saw a leap up in front-end yields, while seeing a less drastic move higher in the long end. Front-end yields increased over 20 basis points (bps), while the Bloomberg 1-15 Year Municipal Index saw closer to a 10 bp increase.
On a month-to-month basis, yields have crept higher each month following the record rally at the end of 2023.
Major Municipal Bond Index Returns (%)
Municipal & Tax Equivalent Yields (%)
Treasuries and AA munis saw an increase in yields across the board. Single A front-end munis saw the most dramatic move up; however, long-end single A munis saw a slight move lower. Value continues to persist in short maturities and past 10-year calls.
While the municipals/Treasury yield ratios remain challenging, we continue to see value in high grade municipals, particularly versus longer duration corporate bonds.
Yield Curve (%)
The ongoing yield curve inversion from 3 to 10 years, as seen below, suggests that a barbell strategy centered around 1 to 2 year and 12+ year maturities is increasingly appealing.
Municipal/Treasury Ratios (%)
The wider spreads between the below data points indicate a steeper municipal curve compared to Treasuries.
Source: All data from Bloomberg as of 3/28/24.
A basis point is a standard measure for interest rates and other percentages in finance. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of the Segall Bryant & Hamill Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. All opinions expressed in this material are solely the opinions of Segall Bryant & Hamill. You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this material does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not under any obligation to update or correct any information provided in this material.