The bond markets rallied this week, 4 to 7 basis points with the yield curve continuing to flatten. Still, trade tensions, Yuan volatility, and focus on central bank future actions kept everyone on their toes.
I woke up in the middle of the night to find out the President Trump had declared beef with Harley Davidson and the World Trade Organization. It made me think of The Notorious B.I.G. song, “What’s Beef”, Beef is when you can’t sleep.
Stocks were volatile but ended higher on the week. U.S. Government Bond Yields rallied and the curve continued to flatten: 2yr 30yr yield difference declined from 50 basis points to 44 basis points differential, 2.97% vs 2.53%. Muni yields underperformed in the rally, with 30yr yields lower by 2 basis points and 2yr yields unchanged. 2yr 30yr yield difference on the Municipal curve declined by 2 basis points, from 32 basis points to 30 basis points. Muni yields are approximately 2yr 1.64% and 30yr 2.94% to end the week. In the Bay Area, the market move that mattered most was the continued decline of cryptocurrencies.
Note: This MSRB trade data is based on market clearing yields for the highest rated municipal bonds. They are approximate yields and are not transactable
In other news, Neighborly was a Co-Manager on a new issue offering for the City of Los Angeles: Social Bonds. The projects that will be funded are all “Social Projects” focused on the benefits of addressing homelessness within the city.
This is part of Proposition HHH that was approved by voters November 8, 2016. The projects approved are expected to create facilities for emergency and permanent supportive housing for: transitional housing, domestic violence shelters and hygiene centers, among others. This gives support to domestic violence survivors, veterans, single women and their children, HIV and mentally ill patients. The chorus of What’s Beef includes a line, Beef is when your moms ain’t safe up in the streets. Happy to see more moms and families safe with the City of LA’s Housing for the Homeless initiative.
Jase Wilson, CEO of Neighborly, often reminds me that municipal bonds are the original impact investment, and he’s right. The combination of the Los Angeles Housing deal and the City of Salinas El Gabilan Library Project made for an uplifting June at Neighborly.
Investing in municipal securities contains risks, including loss of principal. Please read the official statement before investing in any municipal security. Securities offered through Neighborly Securities, Member FINRA, SIPC and registered with MSRB.