Municipal Market Update | October 2024
October 2024 brought higher yields across all maturity buckets for the month. The move up in yields can largely be attributed to the large amount of supply, as municipal issuers tried to get deals to the market before early November elections. All muni indices moved up 36-37bps, as well as the taxable index moving up 34bps.
Major Municipal Bond Index Returns (%)
Municipal & Tax Equivalent Yields (%)
Treasuries across the curve also saw a move to higher yields in the month of October, with the biggest move being in longer maturities. Muni AA and A Revenue bonds also saw moves higher across maturities. 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 continued yield curve inversion from 3 to 10 years, as seen below, suggests that a barbell strategy centered around maturities of 1 to 2 years and 12+ years is still attractive.
Municipal/Treasury Ratios (%)
The wider spreads between the below data points indicate a steeper municipal curve compared to Treasuries.
SBH Municipal Fixed Income Platform
Source: All data from Bloomberg as of 10/31/24. 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. An investor cannot invest directly in an index. 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.
The Bloomberg 1 Year (1-2) Municipal Bond Index measures the performance of municipal bonds with time to maturity of more than one year and less than two years. The Bloomberg 5 Year (4-6) Municipal Bond Index measures the performance of municipal bonds with time to maturity of more than four year and less than six years. The Bloomberg U.S. 1-15 Year Municipal Bond Index measures the performance of USD-denominated long-term, tax-exempt bond market with maturities of 1-15 years. The Bloomberg Taxable U.S. Aggregate Bond Index is a broad-based fixed-income index used by bond traders. An investor cannot invest directly in an index. Yield to Worst is the lowest potential bond yield received without the issuer defaulting; it assumes the worst-case scenario, or earliest redemption possible under terms of the bond. Duration is a calculation of the average life of a bond (or portfolio of bonds) that is a useful measure of the bond’s price sensitivity to interest rate changes. The higher the duration number, the greater the risk and reward potential of the bond.
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