Municipal Market Update | April 2024
The municipal bond market saw another increase in yields over the month of April. Front-end yields increased over 20 basis points (bps), while the Bloomberg 1-15 Year Municipal Index saw closer to a 30bp increase.
On a month-to-month basis, yields have gone higher each month in the year 2024.
Major Municipal Bond Index Returns (%)
Municipal & Tax Equivalent Yields (%)
Treasuries and munis saw an increase in yields across the yield curve. While both A and AA munis saw this spike up, treasuries made the biggest move higher for the month. 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.