Municipal Spreads: Muni yields rose this past week by an average of 11 basis points with the front end seeing the largest bumps as 10-year notes rose by 20.4 basis points to end the week at 2.66%. With the large cuts in munis this past week, munis did underperform Treasuries this past week with the 10-year muni-to-Treasury ratio now yielding 64.42% compared to 63.18% from the prior week. With yields rising, the muni curve steepened by 1.9 basis points to 209 basis points.

According to LSEG Lipper Global U.S. Fund Flows data, we continue to see strong inflows as muni bond funds saw investors add $1.4 billion to muni bonds funds. This follows the prior week’s inflow of $1 billion and marks the fifteenth straight weeks of inflows.

The municipal bond market faced a volatile first week of March, marked by a significant selloff that pushed benchmark yields up by as much as 17 basis points. Muni Yields ticked higher in sympathy with Treasuries this past week as they followed a broader sell-off in the fixed-income market driven by escalating tensions in the Middle East. Rising oil prices and renewed concerns regarding inflation pushed Treasuries higher and in conjunction munis, followed suit earlier in the week. We saw cuts of 12-17 basis points in the 2027-2046 maturity range while the 2047-2058 maturity range saw cuts of 10-13 basis points. With yields rising, returns for the first week are down .77%, bringing total year-to-date returns lower to 1.41%.

During the first week of March, muni‑to‑Treasury ratios rose modestly across most maturities, reflecting municipals underperforming Treasuries as global tensions pushed yields higher. The 2-year ratio rose by a third of a percentage point to 60.33%, while the 5-year ratio rose by just over a half of a percentage point to 60.33%. The 10-year ratio rose by just over one percentage point to 64.28%, while to 30-year ratio rose by just over a half a percentage point to 89.31%.