"The low default rate and fiscally responsible behavior on the part of state and local governments support the strong potential for municipal outperformance" as the supply of new bonds diminishes later this year, Peter DeGroot, a strategist at JPMorgan Chase & Co., wrote in a research note yesterday.
Yields on 30-year debt will increase by 21 basis points while 10-year rates will rise by 38 basis points in the fourth quarter of this year, Peter DeGroot, head of municipal research at JPMorgan Chase & Co., wrote in a Sept. 9 report.
Higher issuance, along with less debt maturing in October and November than in earlier months, may have an effect on the market.
"Supply may begin to weigh on the market in October, given the current and expected uptick in refundings, with average weekly volume in the $6 billion to $7 billion bond range, as reinvestment capital declines and low yields persist," DeGroot
The total from bondholders reinvesting proceeds of matured securities is expected to decrease to $55 billion in October and November from $61 billion in the previous two months, DeGroot
said in an e-mail.