• Treasury and municipal yields saw large increases this week, bouncing back from last week’s declines.

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

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

• The Job Openings and Labor Turnover Survey (JOLTS) report came in higher than expected at 6.17 million jobs this week, versus the consensus of 6.01 million. This is a 0.9% increase from June. Hirings also rose by 1.3%, or 5.501 million, but are still below job openings by 669,000.

• The Consumer Comfort Index dropped 0.7 to 51.9, which while still very strong, it fell from the highs in August due to Hurricanes Irma and Harvey.

• The Consumer Price Index came in at consensus or better this month, the first time since February. CPI had a month-over-month change of 0.4%, higher than the 0.3% consensus, and the year-over-year measure matched the consensus amount of 1.9%. Core consumer prices, not including food and energy, came in at a month-over-month change of 0.2% and a year-over-year change of 1.7%.

• Jobless claims saw a decrease of 14,000 this week, to a total of 284,000. This was less than the consensus number of 302,000, but it’s still relatively high due to the increase of claims from Hurricanes Harvey and Irma. The four-week average increased, settling at 263,250, especially after this week’s data and last week’s large 298,000 claim figure.

• The Fed’s assets increased by $17.7 billion this week, bringing the total level to around $4.471 trillion. The weekly increase is centered in mortgage-backed securities, which rose $14.8 billion.

• During the week, money supply (M2) decreased by $7.2 billion, the first decrease in a month.

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

• Treasury yields saw big increases this week with the 2-year Treasury increasing by 12 bps to yield 1.38%. The 10-year Treasury yield gained the most this week, up 15 bps, and is yielding 2.20%. The 30-year Treasury yield also saw a gain of 10 bps to 2.77%. Municipal yields also increased this week with the 2-year AAA-rated bond yield gaining 3 bps to yield 0.87%. The 10-year AAA-rated bond yield increased 9 bps to 1.88%, while the 30-year yield gained 8 bps and is yielding 2.79%.

• Credit spreads continued to remain mixed this week, with the largest spread between the 5-year Treasury and the AAA-rated municipal bond increasing by 9 bps to settle at 62 bps. The spread between the 30-year securities increased by 2 bps this week.

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 third week in a row and saw gains of $313 million.

The largest issuance of the week and one of the largest of the year is from the State of California. Over $2.5 billion of general obligation bonds were issued this week, with over $802 million in various purpose general obligation bonds and $1.736 million in various purpose general obligation refunding bonds. 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 Hattiesburg PSD’s (MS) GO Rating to Ba1; Outlook Positive: The Hattiesburg Public School District of Mississippi had its ratings upgraded to Ba1 from Ba2 with a positive outlook. The upgrade is based on the area’s improved financial operations, which have increased both its reserves and liquidity position. To explore additional credit reports about other muni bonds issued by the State of Mississippi, click here.

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Moody’s downgrades Wilmington ASD, PA’s GO debt to A2: The Wilmington Area School District of Pennsylvania had over $5.5 million of its general obligation bonds downgraded to A2 this week. The district has had a long trend of declining reserves paired with a below-average-wealth tax base and increasing debt and pension liabilities. To explore additional credit reports about other muni bonds issued by the State of Pennsylvania, 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.