Highlights

  • For the full year, high grade municipal yields declined by 70 to 90 basis points, with the some of the largest declines occurring on the shorter end of the yield curve. The final chapter of the election occurred after the calendar quarter concluded with resolution of Senate control following the January special elections The result will provide for unified government for the incoming administration and this development is anticipated to be positive for state and local governments.
  • The team expects the first quarter to begin slower, in terms of new issue volume, as the issuance spike in October likely included issuers who brought deals forward in anticipation of election uncertainty Street estimates for issuance in 2021 generally range from $450 billion to $525 billion with the caveat that taxable issuance could vary significantly if rates were to rise unexpectedly higher.
  • The team is optimistic that wide distribution of the vaccine, alongside continued fiscal and monetary support can provide a glide path toward economic recovery While they do not anticipate a significant rise in long term interest rates, there could be modest upward pressure as the economic environment improves The team believes somewhat higher yields and an increase in municipal supply resulting from an infrastructure package would be welcome developments for municipal investors who have faced constrained supply and record low yields for most of the past year.
Municipal Securities Risk: Municipal markets may be volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. The views and opinions expressed may change based on market and other conditions.

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