The municipal market was essentially in free fall on Wednesday under mounting, severe selling pressure as COVID-19 fears and fallout continue to deepen.
The world is a different place than it was a mere two weeks ago. The stock market sold off enough on Wednesday to again trigger automatic circuit breakers and shut down trading.
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The economy is likely entering a recession as COVID-19 fears and precautions have tamped consumer spending, the fuel for economic growth. Economists are predicting gross domestic product will contract for two quarters — with two consecutive quarters of negative readings the definition of recession.
Specifically in the municipal market, all benchmarks were rising at a faster clip than most participants could digest, but perhaps at not high enough levels. Benchmarks showed again that the short end was being hit hardest — 30 basis points up on the one-year and at least 10 up on the long end, but the entire curve was being cut drastically. The primary market was again at a standstill.
Read more: Bond Buyer.
