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  Municipal Update 3rd Quarter 2016
Posted Under: Municipal

3rd Quarter 2016 Municipal Market Performance and Highlights

  • Municipal market returns turned slightly negative for the first time in more than a year and underperformed U.S. Treasuries during the third quarter as rates drifted upward. For the three months ended September 30, 2016, the Bloomberg Barclays Municipal Bond Index generated a total return of -0.30% compared to the Bloomberg Barclays U.S. Treasury Index return of -0.28%. Municipal performance was still solidly positive on a year-to-date basis, however. For the nine months ended September 30, 2016, the Bloomberg Barclays Municipal Bond Index returned 4.01% and the Bloomberg Barclays Non-Investment Grade Municipal Bond Index returned 9.37%.

  • New issue supply increased during the quarter. For the three months ended September 30, 2016, new issue volume topped $112 billion to bring the nine month total to $336.7 billion—approximately 5.7% higher than the pace set during the same period in 2015 after lagging it during the first half of 2016.

  • Retail demand continued to be robust despite slowing in September. A net $15.9 billion flowed into municipal funds during the quarter, marking 52 consecutive weeks of positive net inflows and bringing the year-to-date total through September 30, 2016 to $49.5 billion--more than 11.5 times the amount reported for the first nine months of 2015.

  • Credit fundamentals remained healthy as first time defaults continued to trend lower, setting the stage for at least a fifth consecutive year of stable or positive default trends.

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Posted on Friday, November 4, 2016 @ 1:20 PM • Post Link Share: 
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These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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