• Treasury and municipal yields continued to rise.

• Muni bond funds continued inflows for the fifth week in a row.

• Be sure to review our previous week’s report to track the changing market conditions.

• International trade in goods narrowed sharply in August, coming in at negative $62.9 billion versus the July measure of negative $63.9 billion. This was also considerably higher than the consensus estimate of -$65.7 billion. Exports increased 0.2%, while imports declined by 0.3%.

• GDP figures matched consensus in all measures this week, with real GDP seeing a quarter-over-quarter change of 3.1%.

• Consumer confidence reported a level of 119.8, lower than the consensus amount of 120.2. However, this lower measure is attributed to the weakness brought on from Florida and Texas after the hurricanes.

• Jobless claims saw an increase of 12,000 this week, to a total of 272,000. This was slightly lower than the consensus amount of 275,000, but is still a high measure now that the claims from Hurricane Harvey and Irma have been factored in. The four-week average increased again this week, settling at 277,750.

• The Fed’s assets decreased by $2.9 billion this week, bringing the total level to around $4.456 trillion. The weekly decline is centered around mortgage-backed securities, which fell $2.4 billion.

• During the week, money supply (M2) decreased by $13.8 billion, a reversal from last week’s increase of $25.7 billion.

Keep track of economic indicators that might impact the muni market.

• Treasury yields continue to increase with the 2-year Treasury increasing by 5 bps to yield 1.48%. The 10-year Treasury yield moved up 9 bps and is yielding 2.34%. The 30-year Treasury yield gained 8 bps to 2.86%. Municipal yields also increased this week with the 2-year AAA-rated bond yield seeing the largest increase, up 12 bps to yield 1.02%. The 10-year AAA-rated bond yield increased 7 bps to 2.00%, while the 30-year yield gained 7 bps and is yielding 2.90%.

• Credit spreads saw minimal movement, with the largest spread between the 5-year Treasury and the AAA-rated municipal bond decreasing by 1 bps to settle at 57 bps. The spread between the 30-year securities almost remained unchanged.

Be sure to check our Market Activity section to keep track of daily muni trades and historical trades of muni CUSIPs across the U.S.

• Muni bond funds saw inflows for the fifth week in a row and gains of $293 million.

The largest issuance of the week comes from the Regents of the University of California, which issued over $733 million of Series M limited project revenue bonds. The project is meant to fund projects like student housing, faculty housing, athletic facilities, parking facilities and dining service facilities. The bonds are rated Aa3 by Moody’s, AA- by S&P, and AA- by Fitch. To browse credit reports of other muni bonds issued by California, click here.

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Moody’s Upgrades Haverford Twp, PA’s GOULT to Aa1 from Aa2: The Haverford Township of Pennsylvania had over $52 million of outstanding general obligation unlimited tax (GOULT) upgraded to Aa1 from Aa2. The township has a growing, mature tax base paired with conservative budgeting practices, which have led to a manageable debt liability. To explore additional credit reports about other muni bonds issued by the State of Pennsylvania, click here.

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Moody’s downgrades Fond du Lac (City of), WI’s GO to Aa3: The city of Fond du Lac, Wisconsin, had over $76 million of its GOULT debt downgraded to Aa3 from Aa2 by Moody’s this week. The area has seen declining reserves and a high debt and pension burden. To explore additional credit reports about other muni bonds issued by the State of Wisconsin, click here.

We provide this report on a weekly basis. To stay up to date with muni bond market events, return to our News page here.