Municipal bond market recap and outlook Q2 2018

Latest updates on recent municipal market performance and to the Invesco Fixed Income Municipal Bond Team’s outlook

Aug 24, 2018 | Invesco Fixed Income

Municipal bonds produced positive returns during the second quarter, one of the few fixed income sectors to do so. The positive performance was due largely to market technicals, as low new issuance was inadequate to meet investor demand. Some US$53 billion in new issuance came to market in the second quarter, a 15% drop year-over year. This brought 2018 year-to-date issuance to $161 billion, a drop of approximately 20% versus the same period in 2017.  

In the near term, we believe market technicals will continue to be the largest driver of municipal bond performance. Supply-and-demand conditions are likely to remain favorable during the summer, given the seasonally high redemptions expected in the summer months, and the continued residual impact of the 2017 year-end rush.

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