Weekly Fixed Income Update
Interest rates, inflation, central bank action—all these and more can impact fixed income. Stay on top of the market with our weekly update.
July 23, 2024
Macro update
Last week the market reacted to retail sales data from June. Retail data from last month beat expectations (Bloomberg, 7/19/2024).
President Joe Biden announced over the weekend that he wouldn’t be seeking reelection. The president endorsed vice president Kamala Harris to be the Democratic nominee (Associated Press, 7/21/2024).
We expect to see existing and new home sales data, the first reading of second-quarter GDP data and June personal consumption expenditures (PCE) data, which is the Fed’s preferred inflation gauge (Bloomberg, 7/22/2024).
Fixed Income Five by Kevin Lynyak
Municipal bond update
Benchmark AAA muni yields declined modestly across the curve last week. Two-year municipal yields finished the week six basis points (bps) lower, five-year yields dipped by four bps and 10- and 30-year yields eased by two bps. AAA-rated benchmark tax-exempt yields now stand 24 to 50 bps higher than at the start of the year (Refinitiv MMD, 7/19/2024).
The Bloomberg Municipal Bond Index gained 0.16% last week, pushing year-to-date (YTD) performance further into positive territory at 0.34%. The Bloomberg US Treasury Index lost 0.67%, limiting the YTD performance to 0.17% (Bloomberg, 7/19/2024).
Five-, 10- and 15-year A-rated municipal yields were 2.95%, 3.12% and 3.43%, respectively, as of the July 19 close. Related taxable-equivalent yields were 4.98%, 5.27% and 5.79%, respectively, assuming the highest combined federal tax rate of 40.8% (Refinitiv MMD, Parametric, 7/19/2024).
Mutual fund flows were positive at $892 million, with ETFs bringing in $608 million and open-end funds contributing $284 million (JPMorgan, 7/17/2024).
This week’s new issue calendar remains robust for the summer season at approximately $11 billion (Ipreo, 7/19/2024).
Corporate bond update
US investment-grade (IG) corporate yields rose across the curve last week. Two-, five- and 10-year yields rose 14, 12 and eight bps, respectively. Corporate yields are higher across the curve YTD, with two-, five- and 10-year yields up 22, 38 and 32 bps, respectively (Bloomberg, 7/19/2024).
The ICE BofA 1–10 Year US Corporate Index returned -0.17% for the week and 1.10% on a month-to-date basis. The index underperformed like-duration Treasurys during the week by 0.02% and outperformed month-to-date by 0.14% (Bloomberg, 7/19/2024).
IG mutual funds and ETFs experienced inflows of $7.4 billion, an increase from last week’s inflows of $2.9 billion. Corporate-only funds experienced inflows of $3.8 billion following last week’s inflows of $1.4 billion (JPMorgan, 7/19/2024).
Corporate one-to-10-year IG bond yields have risen 11 bps YTD and ended last week at 5.2% (Bloomberg, 7/19/2024).
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