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  4th Quarter 2015 Municipal Market Performance and Highlights
Posted Under: Municipal
4th Quarter 2015 Municipal Market Performance and Highlights
  • The Barclays Municipal Bond Index returned 1.51% for the three months ended December 31, 2015, bringing the calendar year 2015 total return for the index to 3.30% (6.60% on a taxable-equivalent basis) (see footnote 1*). Tax-exempt municipal bonds had the highest risk adjusted returns of any asset class.  Municipal bond yields diverged from U.S. Treasuries. Even in the face of the current global economic malaise of slow growth, falling commodity prices, and volatile equity markets, the Federal Reserve ("Fed") finally raised its benchmark rate during the December meeting, the first rate hike since 2006. While the 10- and 30-year U.S. Treasury rates rose 21 basis points (bps) and 15 bps, respectively, to 2.27% and 3.02% from September 30, 2015 to December 31, 2015, 10- and 30-year AAA MMD yields decreased 11 bps and 22 bps, respectively, to 1.92% and 2.82% for the same period.
  • New issue supply was down dramatically in the fourth quarter due mainly to a substantial decline in refunding activity. While total new issue supply for 2015 was over 18% higher than 2014, growing from $337 billion to $398 billion, the fourth quarter of the year saw municipal bond issuance plummet 23% versus the same period in 2014. (Source: Barclays, SIFMA)
  • Mutual fund flows turned positive in the fourth quarter, totaling $8.1 billion for the quarter through December 23rd (most recent data available) with total 2015 net inflows of $12.3 billion as of December 23, 2015. (Source: Barclays, Investment Company Institute)
  • Municipal credit quality continued to improve. Municipal defaults have fallen in each of the past five years. State and local municipalities continue to see improvement in their revenues and balance sheets.

Click here for the full report.

Posted on Tuesday, February 2, 2016 @ 4:20 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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