Bond Market Commentary

July 20, 2017

Wednesday’s Action

Treasuries finished mostly lower on Wednesday. Yields of U.S. government debt rose as investors await Thursday’s July policy meeting at the European Central Bank. Treasury yields moved modestly higher as market participants speculate that the ECB is preparing to taper its bond-buying program in the coming months. Expectations are that the ECB may wait until the fall to announce any tapering plans. Benchmark 10-year notes were last down 2/32 to yield 2.27%. Shorter-dated two-year paper slipped 1/32 to yield 1.36%. At the long end of the curve, the 30-year bond was 1/32 higher to yield 2.85%.

Municipal Market Commentary

Wednesday, municipal market indices showed that muni bonds were slightly firmer. As reported on July 12, U.S. municipal bond funds posted net outflows of $172.6 million compared with $458.3 million of net outflows the prior week, according to Lipper FMI. Tax-exempt new issue supply is expected to total $7.3 billion thus week, down from less than $8.9 billion the prior week and above the 2017 weekly average of $6.5 billion. The Bloomberg 30-day visible supply fell $839 million to $9.923 billion on Wednesday, below the 12-month average of $12.198 billion. The total is comprised of $2.598 billion of competitive bonds and $7.325 billion of negotiated bonds.

This information is obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed by Wells Fargo Advisors.

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