Yields plummet amid virus, oil fears, Dow closure

By Lynne Funk - Bond Buyer - March 9, 2020

Excerpt below...

The municipal market fell as much as 10 to 12 basis points at one point on Monday amid the COVID-19 crisis and its ricocheting effects on the global economy.

But the municipal market is lagging the rest of the world because munis as an asset class are fundamentally more difficult to monitor and evaluate.

Given the fragmented state of the municipal market with more than 50,000 issuers, many different structures, low liquidity, archaic benchmarks, delayed and non-standard financial filings, the market is having to deal with this crisis moment by moment.

“It’s important for investors to compartmentalize this and realize that muni yields are down, but are now fairly disconnected from Treasury yields,” John Mousseau, president of Cumberland Advisors, said Monday.

The 10-year muni to Treasury ratio on Monday was calculated at 153.8% while the 30-year muni to Treasury ratio stood at 147.3%, according to MMD.

Investors, Mousseau said, should expect anything but liquidity in this market.

“Dealers can’t hedge and the cost of carrying bonds is hurting,” he said, adding that underwriters are bringing new issues “gingerly” in what he described as an unprecedented market.

Read the full article at Bond Buyer (paywall): https://www.bondbuyer.com/news/yields-plummet-amid-virus-oil-price-fears-dow-closure

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