Weekly Update: Powell Set the Tone, but It’s Munis that will Drive Returns

Market Update

Powell let it rip in Jackson Hole, just like that vertical drop-in launch skiing down Corbet’s Couloir: heading down, time to change, then gut check. Equity fans applauded.

• Equity (pts, wk/ytd): Dow +685pts, +1.53%/ +7.26%; S&P +17pts, +0.26%/+9.95%; Nasdaq +126pts, -0.58%/+11.32%

• UST Rates: 2yr @ 3.70%, 10’s @ 4.26%, 30’s @ 4.87%. All 5bps lower on the week, continuing the tight ranges seen all summer.

• Muni Rates: Front-end rally of 5bps and intermediate/long unchanged. 5bp steeper curve = 250bps now 2-30. (See Muni Insights below)

• Economic Data: Housing market not too bad… jobs not too good. This week is Core PCE Wednesday (Fed's preferred) YOY exp 2.9%… Does 2% target still matter?

Muni Insights

Yield curve steepens to 250bps, will issuers (sell shorter debt) / buyers (extend or add) take note? Riverbend says yes to both.

• Supply: A pause pre/post Labor Day, which was much welcomed after the blistering pace. YTD = $400B / over 6,000 deals /+20% vs last year’s ATR.

• Relative Value: Riverbend’s curve + quality + structure trifecta, paying off with attractive tax-free income, safety, and preparedness.

• Credit: State of Illinois, A3/A- highlights next week with $1.8B, 6-part(?), competitive deal. We’ll pass, thanks––but ready for better value.

• States: The Texas PSF Party is over, that was a good time! Did we see some 1-handle California paper trades? Our free advice: look harder.

Munis Moving Forward

Powell set the tone, but muni dynamics will drive returns. Let’s connect on where to lean in. As always, here to answer any questions.